VINACHEM

Annual inflation hit 22.16 per cent in July, setting a pace well above the Government's target of 17 per cent.

Nguyen Duc Thang, head of the GSO's consumer prices department, said inflation was not yet under control despite slowing in May and June.

The consumer price index (CPI) posted a one-month increase of 3.32 per cent in April but then slowed to a one-month rise of 2.21 per cent in May and 1.09 per cent in June.

Thang said that consumer prices rose 1.17 per cent during July, outpacing the 1.13 per cent rate set in July 2008 – the year with the nation's highest inflation rate in decades, at 19.89 per cent.

"The reason of the increase this July was a strong surge in food prices of 3.2 per cent," he said.

Some other factors, including hot weather and heavy rains, livestock diseases and heavier exports to China, had also lowered the supply of food staples such as pork, poultry, seafood, fruits and vegetable, he added.

Just about every other category of goods in the "basket" used to calculate CPI saw increases of under 1 per cent during July. After food, clothing saw the highest increase, posting a rise of 0.74 per cent over prices in June.

In the remainder of the year, Thang said, it would be unlikely to see inflationary pressures ease, as domestic demand rises ahead of the new school year and the holidays, while business input prices such as interest costs were likely to remain elevated. He predicted that inflation for the year might reach 18 per cent.

Meanwhile, the trade deficit for the first seven months remained essentially unchanged at about US$6.6 billion as increased gold exports offset any rise in imports, the GSO also announced.

Le Thi Minh Thuy, head of the GSO's commerce department, said total export value in the first seven months of the year rose by 33.5 per cent over the same period last year to about $51.5 billion.

Rising commodity values ensured that import value increased 26.2 per cent to $58.1 billion despite declining import volumes, Thuy said.

Gold exports totalled $1.75 billion this month, helping offset the overall impact on the trade deficit. However, if they were removed from the calculation of export value, the trade deficit for the first seven months would have spiked to $8.4 billion, Thuy noted.

Imports were likely to increase toward the end of the year due to high seasonal demand, Thuy added, urging the Government to more closely regulate imports. — VNS