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CPI enjoys lowest increase this year
Vietnam’s consumer price index in July saw the lowest increase since the start of the year. However, the figure did not include the impact of the fuel price hike announced last week.
According to a General Statistics Office report, the consumer price index (CPI) in July increased only 1.13 per cent against last month, or 27.04 per cent year-on-year.
Food prices slipped 0.37 per cent and foodstuff prices rose only 1.33 per cent compared to June. Currently, food and foodstuffs account for 40 per cent of the commodity basket to calculate the CPI.The report said that bumper crops in the northern and southern region were a primary aspect hindering the price hike of food and foodstuffs.
Meanwhile, prices of housing and construction materials, alcohol and tobacco and clothing and footwear also increased by only 1.67 per cent, 0.98 per cent and 1.4 per cent respectively.
Economist Ngo Tri Long, former deputy director of the Institute of Market and Price Research, said the slowdown in inflation rates reflected the government’s bid to rein in the price hike over recent months.
“As customers did not fear an increase in prices after June, they did not buy extra goods for reserve. Thus, the price hike was controlled,” said Bui Ha, head of the Ministry of Planning and Investment’s Department of National Economic Generalisation.
However, statistics from the General Statistics Office did not include the impact of the fuel price hike, which was implemented on July 21.
The government permitted fuel suppliers to raise retail gasoline prices by 31 per cent, diesel by 14 per cent and kerosene by 44 per cent. This increase aims to help reduce the burden of fuel subsidies and prevent illegal smuggling. Standard Chartered Bank stated in its latest report that bringing retail fuel prices closer to the global level would be the right move.
“Not only will this help reduce smuggling, retail fuel prices closer to global prices will also help reduce demand, and hence help reduce the trade deficit, taking into consideration Vietnam currently imports all of its refined oil products,” the report said.
“However, the latest fuel price hike, the first since February 8, will obviously have a negative impact on the country’s inflation outlook,” said Standard Chartered. HSBC estimated that the fuel price hike would add around 2 per cent to headline inflation, which would be reflected in the August report.
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