Hanoi - Economists and financial officials worried Tuesday
that Vietnam's inflation rate is worsening despite government
measures to slow it, as new figures showed the consumer price index
rose 3.9 per cent in May, the highest one-month increase since 1995.
May's price hikes brought Vietnam's year-on-year inflation rate
since May 2007 to 25 per cent. Officials were optimistic that
government policies to fight inflation were already taking hold when
inflation dropped to 2.2 per cent in April, but the new figures
dashed those hopes.
'The government's measures to contain inflation have not proved to
be effective,' said Le Dang Doanh, a senior Vietnamese economist and
former adviser to the Prime Minister's office. 'I think the situation
will remain very complicated in the coming months.'
The government has tried to slow growth in credit and in the money
supply by raising banks' deposit requirements, requiring them to buy
government bonds, and removing caps on interest rates. Prime Minister
Nguyen Tan Dung has called on state-owned companies to pare back
unnecessary borrowing and spending, but it is not clear how much
effect those calls have had.
In March, the government froze the prices state-owned firms can
charge for a number of key commodities, including coal, steel, and
electricity. This month the government announced it was continuing
price caps on gasoline, which the government spends some 60 million
dollars a month to subsidize.
'It's going take a while for the policies to have some effect,'
said Jonathan Pincus, senior economist at the United Nations
Development Programme's Hanoi office. 'Clearly we're still moving in
the wrong direction, but that's not unexpected.'
Pincus said he had not yet seen a breakdown of the inflation rate
by sector. He said if inflation were mainly driven by rising food
prices the situation might be less serious, as such inflation could
reflect hoarding and speculation which would dissipate once the next
rice harvest comes in.
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