Vietnam inflation dwindles to zero in major turnaround


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Lower food and fuel prices has helped stave off inflation in Vietnam. Photo: AFP Lower food and fuel prices has helped stave off inflation in Vietnam. Photo: AFP


Vietnam's monthly inflation rate dwindled to zero this month, according to official figures, a dramatic turnaround for the country which once battled hyperinflation.
Year-on-year, consumer price inflation was zero in September, the General Statistics Office (GSO) said in a statement posted on its website Thursday, the lowest reading in almost a decade.
Month-on-month, consumer prices decreased 0.21 percent in September, it added, part of a broader deflationary trend affecting the region.
Vietnam measures inflation on the 15th of each month.
For decades, Vietnam has suffered from runaway inflation -- with triple digit increases in the 1980s and rates as high as 28.3 percent as recently as August 2008.
Economist Vu Dinh Anh credited the turnaround mainly to "lower fuel prices and food prices".
Taming inflation has been a key priority for the Vietnamese government, which has repeatedly increased official interest rates in an effort to prevent the economy overheating.
Last year, overall inflation was 4.09 percent, the lowest rate for 10 years, spurring Hanoi for the first time to express concern about deflation.
The official target is inflation of four to five percent for 2015.
Low inflation gives Vietnam's central bank room for monetary easing and to maintain an accommodative monetary stance, the Asian Development Bank (ADB) said this week, according to Bloomberg News.
Vietnam's growth is expected to accelerate this year, thanks to rising private consumption, export-orientated manufacturing and foreign direct investment, according to ADB.
Vietnam's economy grew by 6.28 percent in the first half of 2015, racing along at its fastest rate since 2008, official figures show.
In August, Vietnam doubled the trading band for the dong, allowing the currency to weaken to try to make exports more competitive after China devalued the yuan.
On Friday, official data in Japan showed consumer prices fell for the first time in more than two years.
While lower prices are good for individual shoppers, they are bad for the wider economy because they tempt consumers to put off purchases with the knowledge products will be cheaper in the future.
That, in turn, discourages firms from investing and ultimately pulls down wages.

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