Vietnam’s June CPI Hits Lowest Point in Nine Months

Posted by Reading Time: 2 minutes

By Nguyen Huyen My

Jun. 28 – According to figures released by the General Statistics Office (GSO) on June 24, Vietnam’s CPI in June increased 1.09 percent compared to May, 13.29 percent compared to December 2010, and 20.82 percent against June 2010.

After many efforts made by the Vietnamese government to stabilize prices in Vietnam, this is the lowest CPI in the first six months this year and for the last nine months. With such slower rising speed, the average CPI of the first six months of 2011 has increased 16.03 percent in comparison with the same period last year.

Professional Service_CB icons_2015RELATED: Dezan Shira & Associates’ Pre-Investment, Market Entry Strategy Advisory Services

In the 11 groups of the general goods basket, only the post-telecommunication group continued to decrease, at 0.01 percent. Ten other groups have the rising of 0.25 percent -1.79 percent in which restaurant and food & beverage catering leads with 1.79 percent and followed by other goods and services with the increasing of 0.86 percent due to the soaring living cost. The group of cultural, entertainment and tourism has increased 0.77 percent. The drinks and cigarette group has also increased 0.76 percent because of the rising demand of summer drinks, plus the rising price of input raw materials that have caused non-alcohol drinks to increase 0.93 percent, wine and beer increased 0.97 percent.

Family equipment and household appliances rose 0.72 percent due to the affection of input materials’ rising price such as petrol, electric power and vendor psychology to lift the price following the other goods. The remaining groups such as hats and footwear garments, housing and building materials, education, and transportation have increased by 0.62 percent, 0.56 percent, 0.47 percent and 0.39 percent, respectively.

The GSO also said that although the CPI in June is the smallest increase within the last nine months, in comparison with the same month since 1995 up to now, the June 2011 CPI stands just behind the abnormal rate of 2.1 percent in June 2008.

Therefore, the consistency in implementing the solution packages to curb inflation together with direct support measures for the polices, the poor, reducing PIT for salaried employers/staff…will help to minimize difficulties when prices of essential commodities, especially foods, are not yet able to be as “cool” as desired.

According to the latest World Bank forecast, Vietnam’s annual inflation will peak at the end of the second quarter and then gradually reduce to 15 percent at the end of the year. However, the target to keep the inflation rate at 15 percent in 2011 depends heavily on the determination of implementing Resolution No.11 of the Government (Resolution on the major solutions for macroeconomic stability – Feb 2011).

Meanwhile, many economists and businesses still worry about price changes for the last six months of 2011 because, at the moment, the bank interest rate remains at a high level; electric power prices may rise; gasoline prices are hard to predict.

Dezan Shira & Associates is boutique professional services firm providing foreign direct investment business advisory, tax, accounting, payroll and due diligence services for multinational clients in Vietnam. To contact the firm, please email vietnam@dezshira.com, visit www.dezshira.com, or download the firm’s brochure here.