This also marked a year-on-year increase of just 1.84 per cent, the lowest growth in the past 13 years.

The CPI drop was attributed to petroleum price cuts on November 22 and December 6 which lowered transport costs by 3.09 per cent, Do Thi Ngoc, deputy head of GSO's CPI Department, said.

The tumble in global gas prices also led to a slump in domestic gas prices since December 1, Ngoc said.

Besides transport, the category of housing and building materials saw the prices decline by 0.94 per cent.

Slight increases were recorded in food and foodstuff prices (0.14 and 0.05 per cent) while the same trend was also seen in such groups as household appliance (0.18 per cent) and domestic services (0.19 per cent).

Meanwhile, little change was seen in four categories, namely hospitality services (up 0.08 per cent); pharmaceutical and medical and educational services (up 0.03 per cent); and culture, entertainment, and tourism services (up 0.07 per cent).

In addition to economic reasons, the low CPI was due to items which were under the State management and saw little adjustment or kept stable due to time-related sensitivity.

In the year 2014, four provinces saw an increase in health care services' prices while some localities made education fees higher.

The average CPI this year showed a 4.09 per cent increase compared to the 2013 average, lower than the government's five per cent target.

The CPIs fell 0.36 per cent and 0.23 per cent in the country's two largest cities of Ha Noi and HCM City in December respectively.

Gold price came down by 0.05 per cent in December and 10.49 per cent for the whole year over last year while US dollar price rose 0.35 per cent.

Once the CPI becomes stable, the State Bank of Viet Nam could further ease monetary policy and reduce lending interest rates, thus helping businesses cut their production costs and stimulate consumer demand.

The GSO General Director, Nguyen Bich Lam, forecast that the recent plunge in fuel prices would continue pulling down production and delivery costs, thus keeping CPI low in January 2015.

Next year's CPI may rise by five per cent if the government continues with drastic measures.

VNS/VNN