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Of the 11 commodity groups, only the price of posts and telecommunications services saw a month-on-month decline of 0.02 percent, a minor rise from 0.01 percent in June.
The sharpest price increase, 2.12 percent, was, again, found in food and catering services, of which food surged the strongest - 3.2 percent. The respective figures of June were 1.79 percent and 2.47 percent.
This group surged 32.63 percent year on year.
The remaining 9 categories rose less than 1 percent.
Not included in the basket of the consumer price index, the rise of gold price index made a U-turn with 6.1 percent rise after slowing down from 1.43 percent in May to 0.36 percent in June, while the decreasing US dollar price index continued its trend this month with 0.18 percent, slipping from 0.78 percent in June and 0.98 percent in May.
But the two indices hiked 34.62 percent and 8.88 percent year on year respectively.
In terms of regions, the Red River Delta saw highest price increase of 1.42 percent, followed by the northeastern region and northern central region with 1.33 percent and 1.11 percent respectively.
Vietnam has recently revised its inflation target in 2011 to 17 percent from 15 percent and 7 percent set last month and at the beginning of this year respectively.
But Vietnam would find it “very difficult” to slow inflation to 17 percent by the end of 2011, Bloomberg quoted Ha Van Hien, head of the National Assembly’s Economic Committee, as saying in the opening of the body in Hanoi on July 21.
A U-turn rise
The CPI hike in July has wiped out the downward trend set in the last two months, said newswire Vneconomy.
The rate, the strongest rise of any Julies in the last 15 years, made Vietnam one of the countries with highest annual inflation rates in the world, said the newswire.
In other words, the purchasing power of a Vietnamese family with fixed incomes has lost over 22 percent over the same period last year.
Those who have deposited in banks would bear negative real interest rates of around 8 percent regarding the official ceiling interest rates in Vietnam dong; or about 6.5 percent compared with real deposit interest rates currently averaging at 15.5 percent a year as recently reported by the government to the 13th National Assembly.
But for listed firms that published their post-tax profits quarterly, the business prospect will be gloomier if their long-term investors ask for higher rates of dividend payment by the year-end to make up the currency devaluation.
The cause of CPI rise in July mostly thanks to rising food prices, food, electricity, petrol and school fees.
Compared with 2008, only food group showed a fair increase, while up to 3-4 groups rose of equal strength as they did three years ago, and the rest three increased sharply with education and cultural-entertainment hiking 6 and 2 times respectively.
This suggests that, if eliminating the food price shock in 2008, inflation hike this year is caused by its structural core. This is a matter of concern, especially when looking ahead to the possibility CPI rise in August over the same period last year.
Looking at the graphs of monthly changes in CPI from the beginning of the year, it's easy to notice that the upward trend this year is quite similar to that in 2008. So, the measures to control inflation so far this year have yet shown any clear impact with those indicators.
With the above perspective, it’s worth reviewing the viewpoint of the Vietnam Center for Economic and Policy Research (VEPR) under the University of Economics - National University of Hanoi, which mentioned in mid-May that the space for macroeconomic policymakers to curb inflation seems at a disadvantage compared to that in 2008.
Since budget deficit and public debt have widened so fast, fiscal policies find them hard to act more flexibly, said the report. And as interest rates were so high, they cannot continue to be used as a useful tool to tame the inflation rise as they did 3 years ago.
In addition, although Vietnam forex reserve has just been added $4.8 billion, its ability to intervene effectively in foreign exchange market is unclear, so mostly administrative intervention will take the role until the year-end.
And as the seemingly untamable CPI still have a bad psychological effect on the people and businesses, CPI rise in August may make a fresh record ever.
Source: Tuoitrenews
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