January 24, 2013 / 4:56 AM / in 5 years

UPDATE 2-Vietnam inflation quickens, seen up to 10 pct in 2013

* Monthly CPI highest since Sept 2012

* Prices expected to further rise in Feb

* 2013 inflation may hit 8-10 pct -ANZ (Adds ANZ forecasts in paragraphs 9-10)

HANOI, Jan 24 (Reuters) - Vietnam’s annual inflation in January quickened to 7.07 percent, while prices increased 1.25 percent from December, the sharpest monthly gain in four months, consumer price index (CPI) data released on Thursday showed.

Prices are expected in February to further rise in the wake of Tet, the country’s largest festival to mark the Lunar New Year, pushing inflation for the full year to as much as 10 percent, analysts said.

The January data, released by the General Statistics Office, showed inflation accelerating from December, when annual inflation was 6.81 percent and the month-on-month rate was up 0.27 percent.

“Prices have been rising because of Tet, but the 1.25 percent increase (in prices in January from December) is rather high, in comparison to the same period in recent years,” economist Vu Dinh Anh at the Price and Market Research Institute said.

Consumer demand tends to soar around Tet, which will fall in early February. But state media have quoted businesses as saying they expected Tet demand to fall by up to a third this year from previous years.

Data showed medicine, healthcare, transport prices led the rise in the January index.

“Prices may further increase next month, and this will require the government to be cautious about containing inflation this year,” Anh said.

January’s CPI reflects price changes between Dec. 15 and Jan. 15, during which the statistics office takes in all readings.

Vietnam may face some upside risks to inflation towards the middle of the year, but the risks will be manageable, ANZ bank said in a report.

“We expect Vietnam’s inflation in 2013 to come in between 8 percent and 10 percent,” the report said.

The government wants to keep inflation between 6.0-6.5 percent, lower than its target of below 8 percent for 2013, but it has also flagged the risk of prices accelerating.

Vietnam’s annual inflation peaked at 23.02 percent in August 2011, slowing since as the government tightened monetary and fiscal policies. The economy has also slowed, however, due to shrinking consumer demand and corporate bankruptcies. (Reporting by Hanoi Newsroom; Editing by Jacqueline Wong)

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