DOI:

Abstract

Vietnam's CPI reveals the actual inflation rate in early months of 2011. Inflation, if it is not properly curbed, will profoundly affect the national economy. One of the most obvious adverse effects of inflation is that it menaces the life of low-income people. Being a purely agricultural country (i.e. more than 70% of population is agriculture-dependent) with a high trade deficit, impacts of inflation in Vietnam are very serious. In this paper, the linear regression model is employed to analyze impacts of agricultural production and import on CPI from 1990 through 2010. The results show that these two factors profoundly influence Vietnam's inflation rate. Additionally, violations of necessary assumptions in the study are also tested using 5% significance level. The research can provide policy-makers with a useful reference for controlling inflation in Vietnam in the future.

Keywords

Import; Agricultural Production; Inflation; Trade Deficit.