AFP: After boom years, inflation bites in Vietnam

A market in Hanoi

A market in Hanoi

HANOI (AFP) — Hit with Asia’s highest inflation rate and a surprise 30 percent hike in petrol prices last week, some Vietnamese are rediscovering bicycles and the frugal lifestyle of bygone years.

Galloping consumer prices — fuelled by record global oil, food and commodity costs — have rocked many countries, but few have been hit harder than Vietnam, where inflation topped 27 percent year-on-year in July.

For many people here the surging cost of living is the first real economic setback since the communist country emerged from the lean post-war years of hyper inflation and food queues to enjoy 15 years of solid economic growth.

“Now I feel like my money is being stolen every day,” said Tran Ngoc Duong, 30, a Hanoi state employee and mother of one. “I spend about one third more than I did last year when I go shopping for my family.”

More than 90 percent of Vietnamese now worry about high food prices, according to a recent survey by market research firm Nielsen, which listed people’s other top concerns as high petrol prices and their children’s well-being.

The survey, released Friday, also found that, while people remained optimistic about the future, 60 percent said they were shopping less, and many had abandoned supermarkets to bargain for groceries on local markets.

While most middle-class Vietnamese are still coping — albeit grudgingly — with the rising gap between income and outlay, for others, especially the urban poor, runaway inflation is far more serious.

A carpenter waits to be hired in Hanoi

A carpenter waits to be hired in Hanoi

Development experts say inflation threatens to reverse Vietnam’s impressive poverty reduction from 58 percent in 1993 to around 15 percent last year.

“A lot of people now aren’t counted as poor, because they’re above the poverty line — but they’re not above it by much,” said Scott Cheshier, a former UN Development Programme economist. “So if rice goes up, meat goes up, petrol goes up, they start to get into difficulties.”

In some coastal villages, media reports say, family-run fishing boats have stayed onshore because the cost of filling their fuel tanks is greater than the profit they could hope to make on a voyage into the South China Sea.

Industrial unrest has been on the rise, with more than 300 strikes reported in the first quarter alone, reportedly prompting Taiwan’s chamber of commerce last week to urge Vietnam to ensure workplace stability.

The last time inflation hit this level was in the early 1990s, when Vietnam was launching its “doi moi” (renewal) market reforms in earnest, setting off a period of annual economic growth of seven percent or more.

Experts say Vietnam’s economy has overheated, with too much new capital chasing too few investment projects and driving up inflation, which first hit double digits last November.

Monthly inflation growth had started to slow somewhat — but last Tuesday state-run oil companies hiked petrol prices by 31 percent to 19,000 dong (1.15 dollars) per litre and also raised diesel and kerosene prices.

People worry that the sharply higher fuel costs will drive up the cost of everything from motorcycle-taxi fares to a bowl of noodle soup, and for many, belt-tightening has become a new way of life.

A service station in Hanoi

A service station in Hanoi

Some people are giving up their Honda Dream, Wave and Future scooters — the ubiquitous symbols of Vietnam’s economic success — and are flocking to buy bicycles, which ruled the streets here until 20 years ago.

Many couples planning to marry in the autumn wedding season are cutting back their guest list, as the costs of venue hire, banquets, and hairstyling have all doubled since last year, The Nation newspaper reported.

A popular rhyme circulating by email on office computers looks with wry humour at life in the times of double-digit inflation.

“I take you to school on my bicycle,” it reads, describing a world where “helmets are suddenly useless,” “dogs will run through the streets with the old men” and “my mother races her electric bicycle.”

“Life in the fuel-saving period is so simple and romantic.”

AFP: After boom years, inflation bites in Vietnam

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