Falling food prices key to May CPI drop

Vietnam recorded sharp drops in four key CPI goods categories, particularly in food and catering services

The General Statistics Office (GSO) has reported that the consumer price index (CPI) for May decreased 0.53 per cent month-on-month, marking the lowest level for the month for 10 years.

Vietnam is using 11 groups of goods and services to measure the CPI. However, in May, while seven groups witnessed negligible month-on-month increases, four key groups saw sharp reductions.

In particular, critical drops were recorded in the food and catering services group (down 1.43 per cent, with foodstuffs down 2.27 per cent), the transport group (down 0.34 per cent), the postal and telecommunication services group (down 0.05 per cent), and the housing and construction materials group (down 0.02 per cent).

In the foodstuff sub-group, the prices of pork and chicken (which contribute to 22 and 16 per cent of the overall foodstuff price) sank by almost 10 and 1 per cent, respectively.

Nguyen Thi Thuy, a stay-at-home mom, told VIR at Hanoi’s Nghia Tan market that there has been a remarkable drop in foodstuff prices, which has helped her save money.

“For example, the price of an egg decreased from VND3,000 (13.6 US cents) to only VND2,400 (10.1 cent),” Thuy said.

“The price of a kilogramme of pork has halved and the price of chicken went down by 8-10 per cent,” she added.

According to GSO, in May, the price of fuel—including oil and petrol—also fell by 0.71 per cent, leading to a 0.03 per cent reduction in CPI.

The lower CPI in May has made the five-month CPI (January to May) climb 4.47 per cent against the 1.59 per cent rise in the same period last year.

According to GSO, core inflation—not including the price hikes of foodstuff, energy, and state-managed health care goods and educational services—climbed 0.08 per cent month-on-month in May and 1.33 per cent year-on-year.

The five-month core inflation rose by 1.56 per cent, lower than the set target of 1.6-1.8 per cent. This shows that the government has been doing a good job controlling inflation.

According to HSBC, receding food inflation in Vietnam is keeping overall inflation in check.

Vietnam’s government aims to keep the CPI lower than 4 per cent this year, and this target is achievable, GSO said.