CPI continues to dip, posts second consecutive fall

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

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 per cent), housing and construction material (-0.03 per cent), transport (-2.71 per cent), and posts and telecoms (-0.08 per cent).

Since the four aforementioned groups with a negative growth rate in prices have a weighting of about 61.54 per cent 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 per cent to 0.51 per cent.

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

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

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

The US dollar price index slipped 0.05 per cent and 0.85 per cent 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 per cent from the previous month and rose 4.64 per cent 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 per cent) and housing, electricity, water, fuel and construction materials (-1.2 per cent), while the strongest fall was for the transport group (-2.9 per cent), 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 per cent from the previous month, the Ho Chi Minh City Statistics Office said. The month-on- month fall in June was 0.43 per cent.

The city’s CPI in July rose 4.3 per cent 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 per cent 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 per cent) and the group of housing, electricity, water and fuel (down 2.15 per cent).

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

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 per cent month on month.

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

In Danang, CPI in July decreased 0.21 per cent month on month and rose 6.1 per cent from last July.

New forecast

Vietnam’s CPI is likely to rise less than 0.3 per cent a month in the third quarter before picking up in the fourth quarter of 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 per cent 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.”