Another command economy loses control of inflation

NY Times:

Even the ghosts are suffering from inflation in Vietnam this year.

August is the month when Buddhists ply the hungry ghosts of the dead with food and wine and cigarettes and honor them with paper offerings that represent the good things in life: cars, houses, motorbikes, stereo sets, fancy suits.

But like everything else in Vietnam, these brightly colored offerings have risen steeply in price, and shopkeepers say people are buying fewer gifts to burn for the dead.

With inflation rising to 27 percent last month — the highest in Asia — and food prices 74 percent above those a year ago, Vietnam is suffering its first serious downturn since it moved from a command economy to an open market nearly two decades ago.

Last month 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. The country’s fledgling stock market, which had been booming a year ago, has fallen in volume by 95 percent and is at a virtual standstill.

Squeezed on all sides, 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.

Some village women who traveled to Hanoi to sell special homemade candies for the hungry ghost festival say they have not earned enough this year to return home.

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It is interesting that where control freaks are in charge of the economy they somehow can't control inflation. The socialist and communist are having their problems in Vietnam, Venezuela, Iran and Zimbabwe which puts itself in a special category of inflation. The command economy can't command or revoke the law of supply and demand.