Vietnam’s annual inflation rate accelerated for a second straight month in October, official data showed Wednesday, as resurgent prices add to the country’s mounting economic woes.
Consumer prices rose 7.0 percent from a year earlier, after an increase of 6.48 percent in September, the General Statistics Office said. Month-on-month, prices climbed 0.85 percent in October.
Until recently slowing inflation had provided a rare glimmer of good news for the Vietnamese economy, which struggled with double-digit price rises for years.
After a string of interest rate hikes by the central bank to prevent the economy from overheating, annual inflation dropped to a three-year low of 5.04 percent in August, well off a peak of 23 percent seen a year earlier.
But the tightening measures and other headwinds mean the Communist country now expects economic growth of just 5.2 percent for 2012 — the slowest rate in 13 years.
Prime Minister Nguyen Tan Dung admitted this week that his government had made mistakes in its stewardship of the troubled economy and had “learned our lesson”.
“There is a risk that inflation may rise again,” Dung told the opening session of the national assembly Monday. He said the government aimed to keep inflation below eight percent for the whole of 2012.
As inflation fell this year, the communist leaders changed tack in response to slowing economic growth, cutting interest rates five times since the start of 2012.
Vietnam is also grappling with falling foreign direct investment and rising fears about toxic debts in the fragile banking system.
Fitch Ratings on Wednesday maintained its ranking for Vietnam’s major banks at “B”, or “junk” status, with a stable outlook, which it noted was already among the lowest in Asia.
The ranking “largely reflects difficult domestic operating conditions and other structural issues typically found in low-income emerging markets,” the rating agency said.
Vietnam inflation rises again in October
