Hanoi - Vietnam's inflation dropped for the third month in a row but remained at nearly 23 per cent for the year, Vietnam's General Statistics Office said Thursday.

Vietnam's inflation was eight per cent last year.

Commodities such as food and building materials have dropped this month, though food prices have shot up 37 per cent in 2008, and construction materials increased by
23 per cent.

Apparel and footwear increased 1 per cent this month, with overall inflation standing at 10 per cent.

After more than a decade of fast economic growth, Vietnam struggled to rein in galloping inflation in 2008. In May, inflation rose by nearly 4 per cent, the highest month-on-month growth.

Several international organizations predicted the country would face a collapse in investor confidence, with inflation slated to reach 30 per cent by year's end and a trade deficit of more than 20 billion dollars.

Vietnam's trade deficit remains a high 17 billion dollars, up from 14.1 billion last year.

Vietnam has not escaped macroeconomic instability as the nation is now facing the possibility of deflation. In order to cope, the government in mid-December announced plans to spend 6 billion dollars to shore up the economy.

Vietnam's economy is forecast to grow 6 - 6.5 per cent in 2009. (dpa)