Inflation hits 21.4% in April
Source: 29-APR-2008 Intellasia | Thanhniennews
Apr 29, 2008 - 7:10:00 AM The government estimated Friday that annual inflation in April jumped to 21.42%, the sixth consecutive month of double-digit inflation and among the highest rates in Asia.

However, the monthly rate of price increases slowed in April to 2.2% from 3% in March, which economists said could bode well for the government as it grapples with policy choices to contain inflation and maintain confidence in the economy.

Monthly inflation data are not fully available but the annual inflation rate in April could be the highest since 1991 when it was 67.5%.

The general Statistical Office said in a report Friday that average inflation in the first four months was 17.61% compared with the same period last year.

Helen Qiao, economist at Goldman Sachs in Hong Kong, said, "The government and central bank should rely on a combination of policies such as an interest rate rise or an increase in reserve requirements."

"It will be very important to watch credit growth and dollar loan growth," she said.

"It's very important to slow down the money supply."

In a series of policy directives in March, the government worked to restrain credit growth, raising commercial banks' reserve requirements and forcing banks to buy treasury bills.

It also froze prices of 10 "essential" goods until June.

These include petrol, electricity, coal, water, cement, steel, school and hospital fees and bus, rail and air travel.

The government itself promised to curb its own spending.

Prices are rising globally, but especially quickly in Vietnam, presenting the government with one of its biggest challenges and forcing it to lower ambitious economic growth targets to reduce poverty and industrialise.

The 2008 economic growth target should be cut to 7%, the planning and investment minister said on Tuesday, from between 8.5 and 9% previously.

The Asian Development Bank sees Vietnam's growth slipping to 7% from 8.3% in 2007 and forecasts inflation of 18.3% this year.

Rice prices, which hit records in Asia and partly triggered riots in Africa and Haiti, have also risen 68% in Vietnam since April 2007.

The government estimated food prices this month were 38.2% higher than at the same time last year.

Food accounts for 42.8% of the consumer price index basket used to calculate inflation.

A spike of 22.6% in housing and construction material prices from last April is another major factor behind the inflation.