Vietnam's intense growth – calculated at 8.16 percent in the first nine months of 2007 – has caused the price of food and foodstuffs to rise 8.12 percent so far this year.

The price of food, which forms more than 40 percent of the ‘basket of consumer goods' used to calculate Vietnam's rate of inflation, rose 13.94 percent in October.

The cost of rice and other grains alone increased by 15.98 percent.

Suppliers have blamed higher costs for production materials and transportation for the trend, which is feared to continue even more fiercely until years end.

Authorities are making efforts to fight artificial price inflation as well as encourage retailers to increase their stocks of goods.

Even costlier by year's end

Tra My, a housewife in Hanoi, is paying twice as much for water spinach, considered a poor man's food not so long ago, as what she paid two days ago.

“This is unbelievable,” she said.

“My stomach stings every time I go shopping for food now.

It's understandable that the [cholera] plague is driving meat and fish prices up, but vegetables and dry goods as well?”

A representative of Hanoi Big C supermarket told Thanh Nien that the prices of foodstuffs they were selling have all surged recently.

Particularly, the cost of cooking oil and instant noodles have surged by half since January.

Yet food prices are expected to hike even further in the months to come as the country celebrates several major festivals, especially the Tet Festival (the Vietnamese Lunar New Year).

To exacerbate the problem, the prices of fertilizers and livestock feed, the majority of which are imported, are also increasing due to high global prices, this despite the government's recent decision to cut import duties on these goods.

"Global rice prices are high and global rice prices stay high as long as oil prices are high, because farmers need to buy fertilizer and fertilizer is a by-product of natural gas," Jonathan Pincus, an economist with the United Nations Development Program (UNDP) told the Agence France Presse recently.

Vietnam joined the World Trade Organization (WTO) in January, and is opening its markets up to the world, making it more vulnerable to global economic trends.

Dao Viet Dung of the Asian Development Bank warned that acceptance into the WTO means "it is also more open to external shocks like the increase in oil prices… resulting in the increase of pressure on prices."

Hoang Tho Xuan, head of the Department of Domestic Market Policy under the Ministry of Trade and Industry, said “the world is now really small” in terms of prices.

The majority of locals still depend on retailers in traditional markets and small stores for their basic consumer goods like vegetables and rice, which generally only have enough goods in stock for a few days of normal business.

In addition, the country also lacks large national reserves to stabilize the market in case consumer goods prices surged, he added.

A stick and a carrot

The Ministry of Finance recently proposed that an inspection be launched into production costs of manufacturers and traders of fertilizers and livestock feed to prevent artificial price inflation among suppliers.

It also asked the Ministry of Industry and Trade and other responsible agencies to further boost the production and import of the commodities.

Meanwhile, Xuan said there would be several conferences this month for authorities and businesses to draft plans for a goods reserve and distribution of essentials for the coming Vietnamese Lunar New Year in February 2008, to ensure prices would not soar.

At a recent meeting in Hanoi, retailers also complained about the lack of capital which could have helped them purchase and stock more goods and thus help stabilize consumer prices during the festivals.

Nguyen Thi Nhu Mai, Vice Director of the Trade Department of the City of Hanoi, said she had proposed that the city government set up a non-interest loan fund to support businesses.

“Those retailers that have concrete plans and have signed contracts for purchasing essential commodities will be awarded loans,” Mai said.

Reported by Thu Hang