Vietnam's annual inflation rate hit 27 percent in July, the government said Thursday, as rocketing food and fuel costs saddle its economy with one of Asia's toughest battles against rising prices. The figure was only a little higher than June's 26.8 percent, but the government's decision earlier this week to hike retail petrol prices more than 30 percent is thought likely to push inflation still higher. Other official data Thursday estimated Vietnam's trade deficit for the January-July period at 15 billion dollars as imports surged more than 50 percent.The figures come after the Asian Development Bank on Tuesday warned Vietnam to take decisive measures to avoid the kind of economic meltdown suffered by Thailand in 1997, which triggered the Asian financial crisis.
Vietnam was once widely hailed as Asia's next economic tiger, but has been battered by double-digit inflation, a ballooning trade gap, tumbling share prices and worries about the banking sector and its currency, the dong. In July alone, food and beverage costs rose by 44.7 percent year-on-year, while the price of the staple food rice and other grains was up 72.7 percent, the state-run General Statistics Office said in a preliminary report. Prices for housing and construction materials were up by 24.9 percent, clothing and footwear was up 10.9 percent and pharmaceuticals and health care costs rose by 9.5 percent for the month. For the first seven months of the year, the consumer prices index has risen by 21.28 percent, the figures showed. The statistics office's trade figures showed imports in the first seven months totalled 51.9 billion dollars, up 56.8 percent year-on-year. Exports rose 37.7 percent to 36.9 billion dollars. The communist nation spent 8.2 billion dollars on importing equipment and machinery, a rise of 40.3 percent.
With large oil reserves but no operating refinery, the country used 7.8 billion dollars to buy petroleum products, a rise of 90.7 percent amid record high global energy prices. Vietnam earned 6.8 billion dollars from selling crude oil, a rise of 52.2 percent against the same period last year. Footwear sales earned Vietnam 2.8 billion dollars, up by 18.4 percent. The country's export turnover from this sector might change as the European Union on Wednesday decided to end preferential tariffs for Vietnamese-made footwear and some other goods. The trade deficit for July alone stood at 700 million dollars. The government has said it has given top priority to fighting inflation and lowered its 2008 economic growth target to seven percent. According to the government website, the public sector, including 15 major state enterprises, have cut more than two billion dollars in costs from almost 3,000 projects scheduled for this year in a bid to help reduce inflation. The Asian Development Bank forecast Vietnam's economic growth would slow to 6.5 percent this year and then hit 6.8 percent in 2009, from 8.5 percent last year.