The cost of 92-RON gasoline, the most commonly used fuel grade, was cut to 20,800 dong ($1) a litre from 21,300 dong, effective 9 p.m. local time today, according to a statement on the government's website. Diesel was lowered to 20,800 dong a litre from 21,100 dong and kerosene to 20,500 dong a litre from 20,800 dong, the statement showed.

The Southeast Asian nation has been trying to slow Asia's fastest inflation, stoked by increases in fuel and electricity prices. prime minister Nguyen Tan Dung's government has shifted its focus from growth to taming rising prices through reducing targets for credit growth and the budget deficit.

The cut in petroleum prices "would help slow the growth pace of food and goods prices, which might help ease inflation pressure," Giang Trung Kien, head of research at FPT Securities Joint Stock Co. in Hanoi, said before the announcement.

Petroleum is a "very important" commodity as it goes into the production of many products, said Alan Pham, chief economist at VinaCapital Investment Management Ltd

Consumer prices increased 23.02 percent in August from a year earlier, the fastest rate among 17 Asian economies tracked by Bloomberg.

The Southeast Asian nation will find it "very difficult" to slow inflation to 17 percent by the end of 2011, Ha Van Hien, former head of the National Assembly's Economic Committee, said on July 21.

Bloomberg - August 26, 2011