HANOI (Reuters) – Vietnam on Thursday raised its average retail electricity price by 3%, the government said, in a move that could put upward pressure on inflation.

Annual inflation in the Southeast Asian country has been easing since the beginning of the year, with April consumer prices rising 2.81% from a year earlier. The government is targeting average inflation of 4.5% for the year.

The widely anticipated hike in electricity prices is expected to help state utility EVN reduce losses as production costs remain elevated.

The average price was raised to 1,920.4 dong ($0.0819) per kilowatt hour, excluding value added tax, the government said in a statement, noting that electricity production costs rose 9.27% last year.

EVN made a net loss of 31 trillion dong last year, according to the Ministry of Industry and Trade.

($1 = 23,445 dong)

(Reporting by Khanh Vu and Phuong Nguyen; Editing by Kanupriya Kapoor)