Fuel Inflation To Dampen Consumer Spending And Retail Growth

The inflationary burden on the Vietnamese consumer just got heavier. With Brent crude prices reaching highs not seen since mid-2008, Vietnamese manufacturers and suppliers have announced that they will increase their sale prices from March 1 2011, as they contend with soaring electricity and fuel prices. The impact of this inflationary environment on the Vietnamese consumer has been exacerbated by the devaluation of the dong and the 300 basis point (bps) worth of interest rate hikes seen in February. Clearly, Vietnamese consumers have quickly found themselves in a tight spot, suggesting that they are likely to tighten their belts this year. Such a scenario would, in turn, present negative implications for retail sales growth in the country.

To read the full article, please choose one of the following options: