Vietnam's inflation slowed to 32 month-low in July on food costs

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Vietnam's inflation slowed for an eleventh month to the lowest in more than two-and-a-half years, supporting moves to spark credit growth and boost the economy.

Consumer prices climbed 5.35 percent in July from a year earlier after rising 6.9 percent in June, the General Statistics Office in Hanoi said Tuesday, the lowest since November 2009. The median of six forecasts in a Bloomberg News survey was for a 5.7 percent rate.

Easing inflation has given the State Bank of Vietnam room to reduce interest rates five times this year as gross domestic product expanded 4.38 percent in the first half of 2012 from 5.63 percent a year earlier.

The monetary authority aims to keep lending rates to businesses stable at around 15 percent as it boosts corporate growth, Governor Nguyen Van Binh said last week.

"Domestic demand has been weak," Matt Hildebrandt, a Singapore-based economist at JPMorgan Chase & Co., said before the report. "Inflation is low now in part because of the slow growth figures," he said, adding that slower credit growth is another reason.

Credit growth expanded 1.76 percent through the first week of July from the end of 2011, Thoi Bao Ngan Hang newspaper reported on July 11, compared with a full-year target of as much as 15 percent.

"Aggressive rate cuts in the second quarter have not translated into robust credit growth as high levels of bad debt discouraged new bank lending," Hai Pham, a Singapore-based analyst at Australia & New Zealand Banking Group Ltd., wrote in a July 18 research note.

Prices fell 0.29 percent in July from June, Tuesday's report showed.

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