-“the government raised the price of gasoline by 31 percent to an all-time high of 19,000 dong ($1.19) per liter (or roughly $4.50 a gallon). Diesel and kerosene prices rose still higher.” - “people are cutting back on food, limiting travel, looking for second jobs, delaying major purchases and waiting for the cost of a wedding to go down before marrying.” -“rumors of price increases have caused panic buying of fuel and rice.” -“vietnam is suffering from the worldwide economic downturn and from high inflation that has spread through southeast asia.” -“as dong, drops in value, people say they are moving their money into dollar bank accounts” Analysis
-General type of inflation: galloping
Normally, an inflation rate of 1-2% is acceptable for an economy (it usually goes with growth rate of 3-5%). Galloping inflation is 10-20% rate and begins to get out of control. In this case, vietnamese inflation rate has increased gradually up to 27% at the moment and does not seem to stop yet. It can possibly turn into hyperinflation if the government cannot deal with the problem. However, since vietnam had grown in 8% for the last decade, the situation is not that pessimistic. -Cause
oCost-push: cost-push inflation happens when there is a decrease in...