VINACHEM

Vietnam's inflation edged up in June, official figures showed Tuesday, marking the first increase in eight months after the government cut interest rates.

Prices hit 6.69 per cent this month, up from 6.36 percent in May, which analysts said shows Hanoi's attempts to stoke demand were showing results.

The government cut interest rates in May for the eighth time in little more than a year as it looked to spur bank lending and boost consumption after economic growth fell to a 13-year low of 5.03 per cent in 2012.

"The slight increase in inflation this month reflected the effectiveness of the government's attempts to stimulate demand," said Hanoi-based economist Le Dinh An on Tuesday.

Vietnam is struggling with a host of economic woes, including slow growth, sluggish domestic demand, a banking sector weighed down with high levels of toxic debt and record numbers of bankruptcies.

In 2011, it repeatedly raised interest rates to prevent the economy from overheating and to rein in double-digit inflation, but last year it was forced to reverse tack and resort to stimulus measures as growth rates slipped.

"However, such a small increase in CPI also shows that the economy is stagnant with a very weak demand. If this situation continues for a long time, it will be difficult to revitalize the overall economy," An told AFP.

Economic growth in the first three months of the year came in at 4.89 per cent, below expectations and prompting officials to admit it had many "shortcomings and weakness".