Vietnam will boost production of essential goods to curb prices and improve the manufacturing sector's access to capital as part of measures to cool inflation, according to a statement posted on the Ministry of Finance's website on Wednesday.
The consumer goods, gold and foreign currency markets will be monitored closely to prevent price speculation so that annual inflation can be kept at 17 percent, the statement said.
It reaffirmed the plan to eliminate subsidies on electricity, fuel and water but added measures will be taken to ease the impact on poor consumers and on inflation itself.
Vietnam's year-on-year inflation may rise between 20 percent and 21 percent at the end of 2011, Dau Tu newspaper reported on Wednesday, citing Le Xuan Nghia, vice chairman of the National Financial Supervisory Commission.
Consumer prices rose 22.16 percent in July from a year earlier, compared with June's 20.82 percent, according to the General Statistics Office. This marked the fastest price increase in Asia.
High inflation and tighter policies will slow economic growth in Vietnam to 6 percent this year, the Economist Intelligence Unit's latest forecast says.
"Sharply higher interest rates and accelerating inflation will weaken private consumption and investment growth. However, if officials are able to get inflation under control without severely undermining growth, the economy will expand by an average of 6.8 percent a year in 2012-15," the research firm said on Tuesday.
Several factors support this positive outlook, it said.
The Economist Intelligence Unit said despite concerns about the quality of Vietnam's business environment and a recent downturn in planned foreign-invested projects, interest from overseas investors is still considerable.