The Nielsen study showed that the official inflation rate had reached 26.8 percent in June, compared to 8.3 percent in 2007. This year, Vietnam experienced its heaviest inflation hike since 1992, with double digit inflation having lasted for eight consecutive months.

However, Aaron Cross, Managing Director of Nielsen Vietnam, said that “although inflationary pressure will directly impact consumer behaviour within some product and service categories, mid-to long-term prospects in Vietnam are still very encouraging. Most of our clients in Vietnam continue to enjoy very strong growth and are increasing their investments based on strong consumer demand”.

Nguyen Thanh Huong, the manager of Charles&Keith Shop on Hanoi’s Le Thai To Street, found no decrease in the number of her clients, as more and more customers were coming into her shop. The manager of Singapore’s trademark brand, which sells mostly shoes and bags, said that product prices from 25-70 USD were acceptable for most of her clients in Hanoi.

The top consumer concerns surrounding inflation amongst respondents were food, petrol, the well-being of children and salaries. Ninety-one percent said they were definitely concerned about food price hikes and 86 percent said they were concerned about increases in the price of petrol, which recently rose 31 percent to 19,000 VND per litre.

Nielsen’s study also found that though consumer remained relatively buoyant, they were aware of tougher times ahead.

Cross said that many of the categories that saw high price increases were home necessities. Some consumers may be forced to switch to cheaper alternatives, given that household budgets were tightening.

The study showed that 77 percent of respondents claimed they were shopping at different retail stores and 60 percent of those people said they now shopped less often due to the increasing prices. Most consumers also currently preferred traditional market stalls over supermarkets.

The survey was carried out in Ho Chi Minh City, Hanoi, Can Tho, Hai Phong in May.

Source: VNA