HCMC – Inflation has surpassed Vietnam’s target despite the country’s efforts to keep it under control, according to HSBC Global Research.

The State Bank of Vietnam, the central bank of the country, continued to hike discount and refinancing rates by 100 basis points to 4.5% and 6% on October 25 to head off inflation risks, in line with HSBC’s projections, HSBC Global Research said in its latest report.

The Vietnamese dong currency has lost 8% against the U.S. dollar, said the report.

Headline inflation in October advanced 4.3% year-on-year, in line with HSBC’s forecast, exceeding the country’s inflation target of 4%.

Food prices increased 5% over the same period in 2021, reflected in the impacts of storms and poor harvests.

Housing and construction materials also edged up 5.4% year-on-year, representing an upward trend in demand for rent and home repair services.

Freight charges contributed a minor part to the inflation rise as fuel prices remained low despite slight increases.

“The events highlighted the risks of rising consumer prices, while the inflation rate is expected to surpass 4% in the upcoming quarters,” HSBC said.

It forecast the central bank would continue to hike refinancing rates by 50 basis points in the first and second quarters of next year and increase interest rates to 7% in mid-2023.