In November, the CPI saw a month-on-month record increase of 1.23 percent, bringing the CPI over the past 11 months to 9.45 percent.

It is likely to rise 1.5 percent in December to reach 10.95 percent by the end of the year.

One of the reasons behind the CPI hike was the surging import rate in the country’s GDP, Deputy Finance Minister Tran Van Ta said.

He pointed to major manufacturing sectors’ large dependence on imported raw materials as the factor has raised the production cost and then the commodities and services prices in the country.

Another factor to drive up the prices was that the Government has loosened its control over the prices of many commodities due to its commitments to the World Trade Organisation (WTO), Ta added.

“The petroleum price has been adjusted in line with the fluctuation of the world market, causing a domino price rise in other products and services,” he cited.

In addition to these reasons, Ta also mentioned natural disaster and diseases as other additional factors.

Natural disasters and poultry flu outbreak had caused a reduction in the supply and pushed up the prices. The prices of food and services were leading the ten groups of commodities seeing surging price, he noted.

Although the Finance Ministry has taken simultaneous measures to contain the price hike right after the first quarter, it failed in forecasting and calculating the world price fluctuations to the local market, which led to the absence of overall and effective solutions.

According to Finance Minister Vu Van Ninh, the price hike will affect the people’s daily life, particularly wage-earners and poor people.

Foreign experts also said that Viet Nam’s rising consumer price index is not capable of causing harm to the economy. Representatives from the World Bank, the Asian Development Bank and the International Monetary Fund (IMF) agreed that Viet Nam’s economy is experiencing a stable period of development with an estimated GDP growth rate of 8.5 percent in 2007.

World Bank Viet Nam Director Ajay Chhibber suggested the government reduce its intervention measures to enable the economy to adjust itself when inflation occurs.

“WTO accession will help Viet Nam reduce inflation pressure by importing goods at low price,” the WB official told Viet Nam News Agency reporter while talking about the impacts of WTO membership on Viet Nam’s economy.

“We must accept the influence of the world market prices when taking up the market mechanism,” said Prime Minister Nguyen Tan Dung at the Government’s regular meeting in November.

He also added that the price hikes would not affect the country’s economic growth because it was excluded from the process of calculation.

Sharing views with the Prime Minister, Deputy Minister of Finance Tran Van Ta pointed to the fact that the per capita income is estimated to increase 5.8 percent.

However, relevant agencies are still asked to continue taking measures to curb the increase of prices in order to stabilise the local market during the year-end.

PM Dung affirmed that the Government’s price policies must conform to the market economy’s regulations and integration commitments but not create loopholes for speculation and unwanted price hikes.

To limit negative impacts of inflation on the working and poor people, the Government pledged no big fluctuation in prices of essential goods, he said, adding that policies that give assistance to the people in need will be carried out instead of subsidies for enterprises.