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August 21, 2008

Inflation in Hanoi speeds up on fuel price hikes
Consumer prices in Hanoi, Vietnam’s will rise faster this month than last month following a fuel price hike in late July, Reuters reported, quoting data from the municipal statistics department Thursday.

While the government has yet to release full inflation data, domestic fuel prices that were lifted by 36 percent prompted analysts to predict Vietnam's inflation would hit 30 percent this month, the highest level in Asia.

Consumer prices in Hanoi, a city of 6.3 million people, will rise 1.9 percent, faster than the monthly growth of 1.7 percent in July, the Hanoi Statistics Department said in a report.

But August's food prices, which account for nearly half the price basket Vietnam uses to calculate inflation, will slip 0.3 percent from July in Hanoi thanks to a bumper summer-autumn rice crop harvest, the statistics department said.

Hanoi's consumer prices are an early indication for Vietnam's inflation. The government's statistics office is expected to release inflation data next week.

Hanoi has been enlarged to take in the whole Ha Tay province and several areas in neighbouring provinces of Hoa Binh and Vinh Phuc, tripling its size and bringing the capital's population close to the eight million people in Ho Chi Minh City.

Last week Vietnam cut petrol prices by up to 5.3 percent, but its impact will not be seen in August's monthly inflation data as statistics agencies stop taking price details on the 15th day of each month to calculate the consumer price index.

The Communist Party government is facing its biggest economic test since market liberalisation began in earnest in the mid-1990s. It has cut growth targets and raised interest rates three times this year to fight double-digit inflation.

Last month the Asian Development Bank revised Vietnam's annual inflation this year up to 19.4 percent, from 18.3 percent previously estimated.

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