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September CPI falls

Released at: 08:28, 26/09/2015

September CPI falls

First time in a decade CPI in September has not increased.

by Le Huong - Quynh Nguyen

Figures released by the General Statistics Office (GSO) on September 24 show that the consumer price index (CPI) in September fell by 0.21 per cent against August - the first time in a decade September CPI has fallen.

Fuel prices down

A number of factors lay behind the fall, according to the GSO. Petrol prices were cut on August 19 and September 3, bringing the Transport CPI down by 3.17 per cent and contributing about 0.28 per cent to the fall in the month.

Electricity demand was also less with autumn arriving, resulting in the Electricity CPI declining 0.32 per cent. Prices for food items also fell 0.14 per cent due to plentiful supplies and falling fuel prices making transport cheaper.

The CPI also remained at a low level due to the prices of essential goods remaining stable. Competition with countries such as Thailand and India put pressure on Vietnam’s rice exports, pushing down domestic prices.

Economy flourishing

With the nine-month figure at 0.74 per cent, Ms. Ngo Thi Anh Duong, Deputy Director of the Price Statistics Department at the GSO, said that the CPI in the fourth quarter is predicted to be at a low level and the government’s target of 5 per cent annual CPI is well within reach.

The low CPI has prompted many to suggest that the State Bank of Vietnam should cut interest rates, creating better conditions for production and business. However, Mr. Nguyen Bich Lam, General Director of the GSO, said that cuts to interest rates would depend on many macro-economic factors, such as money supply, credit demand, and the ability to raise State budget funds. “A low CPI may encourage people to deposit money in banks or invest in other channels,” he said. “But if deposits are low banks may have to consider raising interest rates to mobilize capital. The CPI is only one factor to be considered.”

He added that although the GDP figure for the first nine months is yet to be published, Vietnam’s economy is indeed showing signs of prosperity. The low CPI provides the conditions for enterprises to increase production and business activities, which support GDP growth.

Total demand in the first nine months increased by more than 9 per cent over the same period of last year, while the figures for the first nine months of 2014 and 2013 were 6.22 per cent and 5.3 per cent, respectively. “This suggests that consumer demand is still increasing, and sectors such as mining, processing, and electricity have production development indexes at high levels,” Mr. Lam said.

CPI in first nine months, 2006 – 2015 (%)

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

7.69

7.53

22.8

7.64

8.65

18.2

9.97

6.83

4.61

0.74

 
  • TAGS
  • CPI
  • September
  • General Statistics Office of Vietnam (GSO)

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