It is the 12th straight month of increases in the consumer price index, the general Statistical Office (GSO) said.

Food costs were the main driver, soaring 34 percent.

The United Nations in May said communist Vietnam has one of the world's five highest inflation rates. However, it remains below a recent peak of 28.3 percent seen in August 2008, and far from the triple-digit figures of the 1980s.

Inflation was reported at 22 percent year-on-year in July.

Long focused on growth, the government this year shifted towards economic stabilisation of numerous imbalances that include a large trade deficit, weak currency, and inefficient state spending as well as inflation.

It raised key interest rates, vowed to cut state spending, and ordered that growth in credit, or loans, stays below 20 percent. Authorities are also trying to control the gold trade and reduce the prevalence of US dollars in the economy.

But a Vietnamese banker expressed doubt the efforts are succeeding.

"I have the impression that our economic situation is getting worse," the official from a major private bank said, refusing to be named.

On Monday the government announced that minimum wages would rise by up to almost half in its major cities from October 1 in a bid to help workers cope with rising prices.

Businesses in Hanoi and the southern economic hub of HCM City will have to pay their employees at least two million dong ($95) a month.

But there are doubts about whether the higher wages will be enough to help workers cope, while businesses complain that increased salary costs will add to their burden.

The government aims to keep inflation at about 15 percent this year.

"For the time being it is necessary to concentrate on efforts to see through firmly and effectively the task of controlling inflation," and reducing difficulties for low-income earners, prime minister Nguyen Tan Dung said in a speech at his swearing-in for a second term early this month.

Vietnam's economic growth eased slightly to 5.6 percent year-on-year in the first half of 2011, a little below the country's end of the year target of around six percent.

By Hoang Dinh Nam - Agence France Presse - August 26, 2011