Vietnam inflation under control but pressure building, central bank governor says

"The adjustments in prices for electricity, medical services and housing have been putting pressure on input costs and pushing core inflation up continuously in recent months," Nguyen Thi Hong told a cabinet meeting, according to a government statement.

The Southeast Asian manufacturing powerhouse aims to keep inflation in the range of 4.5%-5.0% this year. Low inflation will give the central bank room to boost lending to meet this year's economic growth target of at least 8%.

"Inflation can emerge very quickly, and once it rises, it is very difficult to tame," Hong warned.

"This is the reason why (the central bank) needs to manage the monetary policies in a proactive and prudent manner," she added.

Consumer prices in July rose 3.19% from a year earlier, according to government data released on Wednesday. Core inflation in the month rose 3.3% from a year earlier.

Hong said the central bank is closely monitoring the flows of money into the local real estate and stock markets, saying that they have been stronger recently but are in line with government efforts to tackle difficulties faced by the property market.

She said loans for the stock markets account for only 1.5% of banks' total lending and "this doesn't pose any threat to the banking system."