HANOI, Dec 25: Vietnam estimated on Tuesday its consumer prices in December would be 12.63 per cent higher than a year earlier, rising at the fastest rate in a decade due to rising cost of housing, food and fuel prices.

Rising foreign investment in Vietnam a year after the country joined the World Trade Organisation also contributed to shooting up consumer prices, economists said.

The government’s General Statistics Office estimated consumer prices this year would be on average 8.3 per cent higher than last year. In December alone, prices were set to rise 2.91 per cent from November, accelerating from the 1.2 per cent rise between last month and October.

With economic growth estimated at 8.44 per cent this year the government has failed to achieve its target to keep this year’s price increases below the economic growth.

Inflation came near the economic growth in 2005 when prices rose 8.4 per cent and the southeast Asian country’s GDP expanded 8.44 per cent. Vietnam’s annual consumer price inflation last reached two digits in October 2004, when it hit 10.3 per cent.

The statistics office estimated food prices this month would jump 15.4 per cent from last December.

Food prices account for 42.8 per cent of the price basket Vietnam uses to calculate inflation.

Costs of housing and construction materials this month would rise 17 per cent from a year ago, the statistics office said.

Property prices have been surging as investors used profits from equities investments to buy land and houses, especially in Hanoi and Ho Chi Minh City, stockbrokers say.

Economists said foreign investment also added to price pressures as the small economy struggled to absorb hefty inflows.

Planning and Investment Minister Vo Hong Phuc told a recent cabinet meeting that foreign direct investment would soar this year by nearly 70 per cent to $20.3 billion.

As foreign funds must be converted into the Vietnamese dong, investment inflows result in high volumes of dong cash being pumped into circulation, adding to inflationary pressures, bank experts said.

Next year Vietnam will aim for economic growth of nine per cent and target inflation below that rate, Prime Minister Nguyen Tan Dung told the cabinet meeting on Monday, the government said.—Reuters