Vietnam’s consumer price index (CPI) increased by 1.37% in February compared to January, a record high since last August, the General Statistics Office (GSO) reported.

Inflation will affect the timetable for interest rate cuts and the future of the real estate market

The index is 2.38% higher than the figure of December 2011, the GSO said.

According to the office, the country restrained the rate of inflation at around 1% per month for six months but February’s index has ruptured the effort.

The nation’s CPI soared by 16.85% in the first two months of this year, compared to the same period last year, the GSO noted.

The office attributed the bigger increase in the inflation rate in February to the sharp rise in prices during the Tet holiday.

In February, the prices of restaurant and food services increased by 2.11% against January and by 3.14% compared to December 2011.

Beverages and tobacco were up 0.86% and 0.23%, respectively, against January while prices of tourism and entertainment services rose 0.52% during the month.

Housing and construction materials grew up 2.47% compared to a month earlier. Home appliances increased by 0.41% against January.

The 5% electricity price hike has had an impact on the CPI in February despite the rise being introduced last December.

Gold increased by 3.27% in February while the US dollar declined 0.41% from the previous month.

The CPI rate is considered a vital factor in estimating any potential interest rate cut which is expected to happen by the end of the first quarter or in early second quarter of this year.

Until now five banks, including Agribank, BIDV, Vietinbank and Vietcombank have lowered their rates.

When the inflation is tamed, the State Bank of Vietnam could apply measures to stir up the moribund real estate market.