Though Vietnam’s consumer price index (CPI) inched up 1.38 percent in the first six months of the year, the monthly inflation rate showed a tendency to rise.
The CPI in the first half of 2014, hitting the lowest rate recorded in the last 13 years, made up only around 20% of the annual inflation target set by the government early this year.
However, with a 0.3 percent month-on-month increase over the rate in May and a 4.98 percent rise against the same period last year, the monthly CPI entrenched a rising trend starting April this year.
Do Thi Ngoc, Deputy Director of CPI Department under General Statistical Office (GSO), said in a press meeting to announce the June’s CPI that the index’s rise in June was relatively high, when compared with the 0.05 per cent increase in June 2013 and the 0.26 per cent decline in June 2012.
The price fluctuation in June, the strongest monthly rise so far this year, largely contributed by the group of medicine and healthcare services with a 0.74 percent rise, of which, healthcare service alone increased 0.87 percent month on month.
The rise is due to the adjustment of healthcare service fees under a circular jointly issued by the ministries of health and finance in 2012. But the circular has taken effect gradually in many provinces and cities across the nation since then, and came into effect in Ho Chi Minh City, the biggest city of Vietnam, in June this year.
The group of housing, building materials, electricity, tap water and fuel posted the second strongest rise, with a 0.61 percent increase from the previous month.
The price of other groups was stable or edged up slightly against the previous month except the group of post and telecommunication with a 0.13 percent fall month on month.
Within reach?
However, given low consumer confidence which resulted in low purchasing power, the whole year’s inflation target may be reached. Many local economists said if the price hike can creates a momentum for growth, the job of controlling this year’s inflation will be under control.
Tran Du Lich, member of the National Assembly’s Economic Committee said at 2014 Spring Economic Forum held in the northern province of Quang Ninh on April 28 that if the growth is not improved much while the CPI stands at 5 percent by the end of the year, it is a failure of policymakers.
After surging in the first two months of this year due to seasonal factor – the Lunar New Year holiday, CPI fell 0.44 percent in March before marking a U-turn by starting to increase gradually in April and May with 0.08 percent and 0.2 percent, respectively.
With a respective month-on-month increase of 0.15 percent, 0.17 percent and 0.28 percent in the last 3 months, the rise in price of food and catering services group, accounting for the biggest weight in the CPI calculation including a basket of 13 groups of goods and services, has contributed to the overall CPI rise.
Moreover, the price of this group is forecast to continue increasing in the coming months as the production costs of farming households still maintain at a high rate.
In addition, some services managed by the state, like healthcare service and tuition fees in some localities, as well as other state-managed commodities, such as oil and gas and electricity price, may see a price hike soon, posing potential risks to the CPI in the near future.
Inflation slows down in H1/2014, but tends to rise Related image(s)
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