return icon

Rising trends likely to persist for 2021 consumer price data

On the back of reopening global economies and a rising crude oil price, Vietnam’s inflation target for 2021 may be harder to achieve, with regulating government bodies attempting to manoeuvre through the year while keeping inflation pressure at bay.

A rise in global crude oil prices can push up inflation in Vietnam. VIR Photo: Le Toan

Although the General Statistics Office has not yet released data on the consumer price data for June, inflation as measured by the consumer price index (CPI) is forecast to increase gradually over the remaining six months of 2021, though Vietnam’s inflation at the moment is maintaining a low growth rate and relatively far from the inflation-control target of about 4 per cent in 2021. Statistics from May show that the average CPI in the first five months increased by only 1.29 per cent on-year – the lowest increase in the same period since 2016.

However, the situation may change in the second half of the year.

Nguyen Chi Dung, Minister of Planning and Investment, at a working session of the National Assembly Standing Committee on June 15, warned that the complicated situation of the pandemic has been affecting all aspects of economic and social life.

Specifically, GDP for the last six months is forecast to reach nearly $173.9 billion, and GDP growth rate is forecast to reach about 5.8 per cent, lower than the government’s target.

As COVID-19 has domestically not been brought completely under control, the CPI could be strongly impacted. The upwards trend in prices in the second half of this year is likely to be prolonged due to the impact of inflation imports from the world.

Production costs may increase faster than general inflation because many businesses are closed leading to a limited supply, while input costs tend to increase globally, and Vietnam generally imports many raw and intermediate materials for production. For example, data from Hoa Phat Group shows that the price of raw materials for steel production has increased sharply. From April to May, the ore price increased from $167 to $229 per tonne and continues to increase.

Even as the average CPI in the first three months of 2021 increased by only 0.29 per cent on-year – the lowest first-quarter increase in the past 20 years, the goal of controlling inflation below 4 per cent remains a difficult task as the US and other markets launched many economic stimulus packages, leading to an increase of the global crude oil price.

According to calculations, if the average crude oil price is about $60 per barrel, the CPI in 2021 could increase by 0.9 per cent.

All forecasts lead to a sharp increase in the crude oil demand this year as countries have been reopening their economies. International organisations forecast that the average Brent oil price in 2021 will reach about $60 per barrel, an increase of 40 per cent compared to 2020, corresponding to the average domestic petrol price this year that may increase by about 25 per cent. This development could cause Vietnam’s overall CPI to increase by 0.9 percentage points compared to 2020.

The loosening of the monetary policy to promote economic growth, reflected in a series of actions such as the State Bank of Vietnam’s permission for many banks to increase their charter capital, may also have had an impact on prices in the last two quarters of the year.

Normally, economists and banks do not worry too much about commodity price fluctuations, as they are just a part of inflation compared to other costs, such as housing. However, an early warning of inflation is still required when input prices skyrocket as the market is more responsive to changes in the economy than prices of finished goods.

“Thus, inflation pressure remains present and may even increase gradually until the end of the year,” warned Nguyen Trung Tien, deputy director of the General Statistics Office. “Currently, businesses are adapting to the new normal, and commercial services and manufacturing activities are gradually reopening, increasing the demand for capital and raw materials – factors that push the price level upwards, and put inflation pressure on the whole of 2021.”

Tien realised that the continuation of the loosened monetary policy to serve economic recovery creates a demand-pull factor that will push up the prices of basic commodities. “The authorities need to closely monitor the supply and demand movements, as well as the market prices of essential commodities. That means being proactive in the management of prices at the right time with the right dosage,” Tien said.

Source: VIR

CPI growth in 2021’s first half lowest since 2016

CPI growth in 2021’s first half lowest since 2016

Vietnam’s consumer price index (CPI) in the first half of 2021 grew 1.47% compared with the same period last year, the lowest rate since 2016, according to the General Statistics Office.

Expert believes inflation could fall below 4% this year

Expert believes inflation could fall below 4% this year

With the consumer price index (CPI) increasing by 1.47% during the first half of the year, the lowest rise since 2016, it remains entirely feasible for the country to keep inflation below 4% this year.


Chief of Staff of Japan Air Self-Defence Force visits Vietnam

Deputy Minister of National Defense and Chief of the General Staff of the Vietnam People’s Army Sen. Lieut. Gen. Nguyen Tan Cuong received Izutsu Shunji, Chief of Staff of Japan Air Self-Defence Force, in Hanoi on June 28.

19 foreign airlines to run routes to Da Nang over coming months

Up to 19 foreign airlines are set to operate international routes both to and from Da Nang City of Vietnam between July 1 and October 29, according to the city’s authorities on June 28.

Noi Bai Airport overwhelmed by rising passenger numbers

The number of passengers passing through Noi Bai International Airport in Hanoi has reached a record number, exceeding the airport’s design capacity.

Aviation industry forecast to fully recover in 2025

It is not until 2025 that the local aviation sector can fully recover due to rising fuel prices and the slower-than-expected reopening of international markets, according to domestic airlines.


Hanoi airport faces serious congestion during summer peak

Hanoi and Hoi An among Top 25 Overall Experiences in Asia

Motorbike tours around Hanoi and cooking classes in Hoi An have made it into the Top 25 Overall Experiences in Asia, as voted on by readers of TripAdvisor.

Vietnam, Hungary seal judicial cooperation deal for 2022-2023

Vietnamese Minister of Justice Le Thanh Long and his Hungarian counterpart Judit Varga on June 27 signed a cooperation programme between the two ministries for the 2022-2023 period.

India conglomerate pledges to invest 10 billion USD in Vietnam

A joint venture between India’s Adani Group and Vietnam’s Anh Phat Investment Construction & Trading JSC has been approved by authorities of Da Nang to start studying the development of a major seaport in the central city.


Govt approves appointment of contractors for North-South expy project

HCM City hi-tech park to speed up investment procedures

HCM City will focus on helping businesses invest in the Saigon Hi-tech Park in Thu Duc City by addressing slow administrative procedures, a conference on facilitating investment heard on June 27.

Korea, Vietnam to mark 30th anniversary of relations with cultural events

The Korea Content Creation Agency in Vietnam will organise a series of cultural-entertainment events this year to commemorate the 30th anniversary of the establishment of diplomatic relations between the two countries.

HCM City to promote AI in education sector

HCM City will need to promote the application of Artificial Intelligence (AI) in the education sector as part of its effort to become a smart city by 2030, experts said.

Additionally-registered and share-purchased FDI soars sharply in first half of 2022

Despite newly-registered FDI dropping in the first half of the year, additionally-registered and share-purchased investments increased significantly on-year.

Vietnam joins hands with France to renovate Hanoi’s Long Bien bridge

Vietnamese and French experts will join hands to renovate Hanoi City’s deteriorating Long Bien Bridge in the coming months.

Lessons learned from urban railway projects

The urban railway projects that have been and are under construction are all behind schedule, so the total investment must be adjusted.