Fuel prices rise again in Vietnam

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Vietnam has raised fuel prices for the second time in just over a month, further stoking concerns about inflation that is the highest in Southeast Asia.

A liter of petrol jumped 10 percent to VND21,300 (US$1.01) from VND19,300, the Ministry of Finance announced on its website, while a liter of diesel rose from VND18,300 to VND21,000.

The increase took effect late Tuesday and followed an 18 percent hike on February 24.

The earlier adjustment in subsidized prices was expected after Vietnam devalued its currency, which in turn pushed up the price of imported fuel.

The government blames rising global oil prices for the latest increase, which comes despite efforts to compensate for that by reducing the fuel import tax to zero percent, it said.

"Gas and petroleum consumed in the country now are mostly imported," the finance ministry said.

"To solve the issue after having applied all financial measures... it is necessary to continue to adjust the price to partly reduce subsidies on petroleum and gas prices."

The ministry said oil prices were between VND4,800 and VND7,000 lower than those in neighboring China, Laos and Cambodia, depending on the type of fuel. This has led to smuggling of Vietnamese petrol.

Over the past month global oil prices have jumped to two-and-a-half-year highs above $100 a barrel amid tensions in the crude-rich Middle East and North Africa.

Official estimates last week said Vietnam's inflation was estimated to hit a two-year high of 13.9 percent year-on-year in March.

"It's unbelievable," said Nguyen Thi Huong, 56, a housewife.

"I know nothing about the macroeconomy, but I know that if the price of petroleum increases, prices of other things will increase as well."

The government has proclaimed fighting inflation its number-one priority.

It has raised key interest rates to control rising prices, and set a series of targets to help stabilize the economy which faces a complicated mix of challenges including a struggling currency and a trade deficit.

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