HANOI: Vietnam's inflation accelerated in January, according to official data, reducing expectations of further monetary stimulus to boost the economy.
Consumer prices were up by 7.07 percent this month from a year earlier, following a 6.8 rise in December, the General Statistics Office in Hanoi said in a statement. Month-on-month prices gained 1.25 percent.
A further increase in prices is expected next month due to high demand before the Lunar New Year festival which starts on February 10, one Hanoi-based banker who did not want to be named told AFP.
Vietnam repeatedly raised interest rates in 2011 to prevent the economy from overheating and to rein in double-digit inflation, but with the economy cooling the authorities last year resumed monetary stimulus efforts.
The central bank in December cut interest rates for the sixth time since March as annual economic growth slowed to the weakest pace in 13 years, at roughly five percent for 2012.
Resurgent inflation is now seen as limiting the scope for further monetary stimulus that could stoke price pressures.
"It will not be easy to keep inflation below the government's initial target of 6.9 percent" in 2013, said one independent analyst who asked not to be named.
"The authorities will have to be very careful about future monetary policy. It is too early to say if they will have to raise interest rates again. They are in the middle of nowhere and don't know which path to follow."
The communist nation's economic woes are compounded by worries over toxic debts in the banking sector, falling foreign direct investment and a string of financial scandals among state-owned firms.
- AFP/al
Resurgent inflation dampens Vietnam stimulus hopes
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Resurgent inflation dampens Vietnam stimulus hopes
