Vietnam raises oil product prices after inflation eases
Vietnam on Wednesday raised retail prices of oil products by between 3 percent and 12 percent, in line with a recent rise in global oil prices and to discourage smugglers, the Finance Ministry said.
Petrolimex, Vietnam's top oil importer and distributor, said it had raised its retail price for 92-octane petrol, the most popular grade, by 10 percent to 22,900 dong ($1.1) per litre, while diesel rose 4.9 percent to 21,400 dong per litre.
Kerosene was raised by 3 percent to 20,800 dong per litre and fuel oil jumped 11.9 percent to 18,800 dong per litre, the Finance Ministry said in a statement.
This is the first fuel price rise this year, after the country recorded slowing inflation last month, when the consumer price index rose 16.44 percent from a year ago, below January's annual rise of 17.27 percent.
Several importers of oil products have sought permission to raise their retail prices to offset an increase in global prices that the Finance Ministry said rose to nine-month highs.
Fuel prices have been kept stable in Vietnam since last October, when diesel prices were cut by around 2 percent and kerosene prices were down 1.5 percent.
With domestic prices held stable against the backdrop of rising global oil prices, the gap with prices in neighbouring countries such as China, Cambodia and Laos has widened, spurring smuggling in the southern provinces, the Finance Ministry said.
It said the price hike was necessary after Vietnam cut the import duty on several oil products to zero or 3 percent and also used up the state-run price stabilisation fund.
The fuel price increase on Wednesday would be reflected in consumer prices later this month, one of several reasons that raised concern over pressures on prices.
"We are concerned that non-food/fuel (core) inflation remains sticky at 10.2 percent year-on-year, suggesting still elevated demand pressures on prices," ANZ said in a report on Wednesday.
Rising oil prices pose a risk as transport prices contribute nearly 10 percent to Vietnam's consumer price index basket, ANZ said in response to Tuesday's central bank announcement of its rate cut plans.
The central bank governor was quoted as saying interest rates would soon fall, with a 1 percentage point cut both in the base interest rate and the cap for dong deposits. ($1=20,825 dong)
By Ho Binh Minh - Reuters - March 7, 2012