The inflation fight remains on track with prices rising by 5.14 percent as of October end compared to the full-year target of 7 percent or less and HSBC not expecting the rate to accelerate in the remaining months.
An HSBC release on Vietnam's economy November 4 said low domestic demand is among reasons why prices would not rise much more this year.
It forecast inflation to be 6.6 percent this year.
It said food, whose prices climbed 4.1 percent year-on-year in October after a 3.5 percent rise the previous month, is among the items creating inflationary pressure.
But it forecast the rise in food prices to slow down in the remaining months.
HSBC also expects global oil prices not to increase until at least March 2014.
In early October the government ordered a minimum cut of 1.6 percent in retail prices of 92-RON gasoline, Vietnam's most popular variety, to VND23,880 (US$1.13) per liter.
The HSBC Purchasing Managers' Index (PMI), a snapshot of the manufacturing sector's health, remained unchanged at 51.5 in October from a month earlier.
The above-50 PMI reading, which indicates an expansion, reflected a "record" rise in new orders.
While demand in international markets has improved to benefit Vietnam's exports, domestic demand remains sluggish due to the credit squeeze by a banking system crippled by bad debts, HSBC said.
Nguyen Van Binh, governor of the State Bank of Vietnam, said November 1 that credit had grown 6.8 percent compared to the full year's target of 12 percent.
Despite slow progress in the cleanup of bad debts, the economy is performing "quite well," HSBC said, adding that the country enjoys greater economic stability thanks to stable inflation and exchange rates.
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