Vietnam has reached a milestone in its perennial battle to get the cost of living under control. The government reported inflation dropped in May into single digits: 8.3% from May 2011 and up less than 0.2% from April. The cost of living increase peaked at 23% last August when it was highest in Asia.
The newly reported CPI index is more than a psychological lift. It means the government may begin shifting its priorities toward economic growth and consider reducing interest rates for businesses.
Vietnam boasted one of the world’s fastest growing economies until 2009 — and still targets 6% growth for 2012. Some economists think that may be too ambitious, but the taming of inflation will help.
More on Vietnam inflation in 2012