Deputy Minister of Industry and Trade Nguyen Thanh Bien said his ministry had asked city authorities to investigate what organizations or individuals had started the rumours.

Word that retail gasoline price would rise from 19,000 dong (1.10 dollars) to 25,000 dong per litre started at about 4 pm in Ho Chi Minh City's Binh Tan district and quickly spread to the rest of the city, according to city vice chairwoman Nguyen Thi Hong.

'All the fuel stations in the city were surrounded by long lines of motorbikes and cars waiting to buy gasoline,' Hong said. 'Many people even brought containers to the fuel stations to fill them up.'

Hong said the panic buying caused chaos in the city, Vietnam's economic hub, for three hours.

'The situation did not return to normal until the Ministry of Industry and Trade issued an urgent message late Tuesday afternoon denying the rumours,' Hong said.

The Trade Ministry's Bien said the false news had hurt the government's efforts to curb inflation, which topped 27 per cent in the first seven months of this year. Expectations of higher fuel prices could encourage price hikes in other sectors.

'The government doesn't have any plan to raise the gasoline price,' Bien said. 'Those starting the rumours will face an initial administrative punishment and, if necessary, criminal charges.'

On July 21 Vietnam raised its retail gasoline price by 31 per cent to 19,000 dong per litre. The price rises have been painful for poor people dependent on gasoline use, such as taxi drivers, fishermen, and people commuting to work via motorbike.

The government froze prices of gasoline and other key commodities in March as part of an effort to tame inflation. But such price controls may be exacerbating panic buying episodes like the one Tuesday, as consumers wonder when the controls will be lifted.

On Sunday, Prime Minister Nguyen Tan Dung ordered the heads of provinces and government agencies to monitor prices and reject any increases that were not 'reasonable.' Dung also ordered them to crack down on speculators and people spreading rumours for personal gain.

In April this year, Vietnam blamed fabrications of rice shortages for an episode of panic rice buying. Over three days, rice prices shot up 200 per cent to some 25 million dong per ton.

In a communique issued afterwards, Prime Minister Dung blamed the price surge on 'evil people' who had 'started false rumours about food imbalances in our country to speculate on rice for profit, and to smuggle to other countries.'

Deutsche Presse Agentur - August 6, 2008