Inflation in Vietnam Soars!

Inflation in Vietnam Soars!

The inflation rate in Vietnam has soared to an unthinkable 27.04% in July to one of the highest inflation rates ever recorded. Yet, just like the Eurozone, government statistics blame the inflation on the rise in fuel costs and predict that the worst is yet to come.

Last week, the government in Hanoi raised fuel prices over thirty percent. The decision was met with public outcry. Just as in every other economy, the hardest hit are the worker's and consumers of the lower and middle classes. Social unrest is met with vigorous disapproval from the government and officials are keeping an eye on the disarray.

The Prime Minister, Nguyen Tan Dung, has issued warning for state owned companies to tighten their policies and to cut back on all expenses as well as to avoid all unnecessary investments.

Mr. Dung also called his cabinet to undertake a stricter monetary policy and to make price control an utmost priority.

Mr. Dung intends to cut the inflation rate back to single digits by year's end, but the Vietnamese government may have to sacrifice high economic growth rates.

The Asia Development Bank has recently reduced their growth forecast for Vietnam in 2008 to 6.5% from the previous 7%.