Vietnam - Vietnam CPI continues to dip, posts 2nd consecutive fall

Vietnam’s consumer price index (CPI) in July continued to post a negative growth rate of 0.29 percent, the second drop in a row, according to the General Statistics Office of Vietnam (GSO).

With the new CPI figure, the country’s CPI rose 2.22 percent from December 2011 and 5.35 percent year on year. The respective figures of June were 2.52 percent and 6.9 percent.

This was the lowest annual inflation since November 2009.

Of the 11 groups of commodities and services used for the CPI calculation, four saw prices drop against the previous month, including food-foodstuff-catering services (-0.46 percent), housing and construction material (-0.03 percent), transport (-2.71 percent), and posts and telecoms (-0.08 percent).

Since the four aforementioned groups with a negative growth rate in prices have a weighting of about 61.54 percent in the GSO's price basket, which has been expanded to cover 573 items from 495, they pulled the whole index down.

The remaining areas, excluding medicine and medical services, saw prices edging up over June, ranging from 0.22 percent to 0.51 percent.

Medicine and medical services saw prices shoot up by 3.36 percent in July.

The CPI growth rate in seven of Vietnam’s eight economic regions turned negative, ranging from 0.19 percent to 1.06 percent. The North Eastern region alone saw a 0.95 percent rise.

Excluded from the CPI calculation, the gold price index in June decreased 0.31 percent and 7.8 percent over the previous month and December 2011, respectively.

The US dollar price index slipped 0.05 percent and 0.85 percent from December 2011 over the previous month and December 2011, respectively.

Vietnam’s consumer price index (CPI) posted minus 0.26 percent growth in June 2012, the first drop in 38 consecutive months.

Falling further

Hanoi’s CPI in July continued to fall 0.29 percent from the previous month and rose 4.64 percent over the same period last year, the Hanoi Statistics Office reported.

Thus, this is the third consecutive month in 2012 the capital city’s CPI has seen a month-on-month fall, and marked the strongest decline since early this year so far. It also marked the strongest fall since 2009.

In the month, as many as eight groups of commodities posted increases in price, of which highest rise was seen in the group of garment and textile, headwear and footwear (1.09 percent), and household appliances (0.81 percent), while six remaining groups posted slight rises.

Three groups with falls in CPI helped reduce the common price index, namely restaurant and catering services (-0.21 percent) and housing, electricity, water, fuel and construction materials (-1.2 percent), while the strongest fall was for the transport group (-2.9 percent), thanks to the constant reductions of oil and gas prices recently.

Ho Chi Minh City’s consumer price index (CPI) in July continued to fall further by 0.57 percent from the previous month, the HCMC Statistics Office said. The month-on- month fall in June was 0.43 percent.

The city’s CPI in July rose 4.3 percent from last July.

Five of 11 groups of commodities and services saw a rise in price index, but the rise was negligible, of which the strongest increase was seen in the education group, with only 0.23 percent from the previous month.

On the downside, another five of 11 groups of items decreased in CPI, of which the two groups with particularly high declines contributed to the general fall of the city’s CPI, including the transport group (down 2.89 percent) and the group of housing, electricity, water and fuel (down 2.15 percent).

In comparison with December 2011, the city’s CPI in July increased by 1.47 percent.

However, it is forecasted that the month-on-month CPI will increase in the remaining months of this year as prices of electricity and healthcare services were adjusted up after producers cleared inventories and gained repayment.

In the southern province of Long An in July, prices of consumer goods were stable over the previous month, while the general index fell 0.06 percent month on month.

In southern Dong Nai Province, CPI this month July fell 0.25 percent from June and rose only 3.03 percent from December 2011.

In Da Nang, CPI in July decreased 0.21 percent month on month and rose 6.1 percent from last July.

New forecast

Vietnam’s CPI is likely to rise less than 0.3 percent a month in the third quarter before picking up in the Q4/2012, according to Bao Viet Securities Co (BVSC) in its recent report to its customers.

The company also lowered its 2012 inflation forecast to 5.5-6.5 percent since “June CPI suddenly turned around”, it said.

The company viewed slowing inflation as an opportunity for the State Bank of Vietnam to hold off on aneasing policy to support growth and focus on a lower interest rate.

However, BVSC said the negative CPI growth in June can be seen as an early alarm for Vietnam to take action proactively.

“But the figure is not worrying as we can only call it deflation when CPI falls continuously for at least two quarters.”

Tuoi Tre

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