Inflation reaches record highs in first quarter

March 22, 2011 | 10:04

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Price hikes of electricity and petroleum are among main causes for the sharp increase in the consumer price index (CPI) iní the first quarter of this year.

Deputy PM Nguyen Sinh Hung

Deputy Prime Minister Nguyen Sinh Hung said that high interest rates, an unstable exchange rate and changing gold prices have contributed to rising CPI.

Vietnam’s CPI in March is estimated to grow by 2.2 per cent, compared to 1.74 per cent in January, and 2.09 per cent in February.The first quarter’s CPI will rise of 6.1 per cent, sets a new record.

The domestic market has been impacted by the increase in global inflation, particularly including the prices of food, gold and crude oil, Hung said, adding that, the political turmoil in North Africa and the Middle East, along with Japan’s earthquake has also influenced on the Vietnamese economy.

The Hanoi Statistics Office showed that Hanoi’s CPI for March increased by 2.41 per cent over last month and 13.56 per cent compared to the same period last year.

This is the sharpest rise of the city’s CPI since February 2010 when it stood at 2.61 per cent.

Vietnam is estimated to reach GDP growth of 5.5 per cent in the first quarter, slightly down compared to 5.83 per cent from the first quarter of last year. Investment for development projects during the Jan-March period is expected to increase by 14.3 per cent from a year earlier.

The Vietnamese National Assembly has set a target for a CPI increase of 7 per cent this year. Last year, the country’s inflation rate was estimated at 11.75 per cent, much higher than the target of 7 per cent, set by the National Assembly, or the 8 per cent set by the government.

Recently, the government issued Resolution No. 11, focusing on measures on inflation control and macro-economic stabilisation, including tightening control over public investments and reducing budget deficit to below 5 per cent of GDP.

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