Vietnam to cut petrol prices by 4 pct to curb inflation

The Vietnamese government has agreed to a plan to reduce gasoline prices by about 4 percent as it seeks to contain high inflation.

Consumer prices in July rose by 8.39 percent from a year earlier due to higher import costs, rising food prices and higher foreign investment. The government says inflation was still under control but tight measures should be taken to curb price hikes.

Prime Minister Nguyen Tan Dung approved a proposal by the Finance Ministry at a cabinet meeting on Sunday to cut retail gasoline prices, a government report said. It gave no timing for the reduction, but the move is expected soon. Prices of other fuel, including coal, and oil products such as diesel and fuel oil will stay unchanged, the report said.

Finance Ministry officials have said retail gasoline prices would be cut by about 500 dong (3 U.S. cents) per litre. The most popular 92-octane petrol grade would be priced at about 11,300 dong (70 U.S. cents) per litre, down from 11,800 dong now.

Despite having allowed distributors to set their own selling prices earlier this year, Hanoi still maintains tight control over fuel prices as it requires sellers to seek government approval before making any changes.

Prime Minister Dung also ordered government offices to lay out effective measures to achieve an economic growth of 8.5 percent for the whole of 2007 and keep inflation below the economic growth rate, the report said.

Last week Hanoi slashed import tariffs on a host of products including cars, steel and several food items such as beef and diary products as it moved to battle rising consumer prices.

Vietnam ranks as Southeast Asia's third largest crude producer after Indonesia and Malaysia but is forced to import most of its oil product needs as it lacks major refineries.

Source: Reuters