Viet Nam’s 2016 inflation rate has been kept relatively low at 4.74 per cent, less than the estimated annual five per cent.

This was due to the combined effort of the government and financial economic administrative agencies, Nguyen Bich Lam, director general of the General Statistics Office of Viet Nam (GSO), said.

The low inflation rate of 2016 has been achieved through careful adjustment of prices by the government according to market indication, despite price hikes for several essential goods, Lam said at GSO’s year end conference on 2016 economic indexes in late December.

December 2016 also saw the consumer price index (CPI) rise slightly by 0.73 per cent compared with November 2016, despite purchasing needs for the new year 2017.

Out of the 11 main sectors of consumption goods, the GSO reported price rise in six -- pharmaceuticals and healthcare service rose by 5.3 per cent, clothes and footwear rose by 0.25 per cent, beverages rose by 0.21 per cent and housing and construction materials rose by 0.19 per cent, as well as other goods and services rose by 0.1 per cent and household goods rose by 0.08 per cent.

The reason for the CPI hike in 2016 was determined to be the government’s upward price adjustment of healthcare services, higher demand for food and construction before the Lunar New Year and El Niño’s effect on crops resulting in a deficit in rice supply, pushing the rice price higher.

Four sectors went down in CPI -- transport by 0.89 per cent, telecommunication by 0.03 per cent, food products by 0.03 per cent and culture, travel and entertainment by 0.02 per cent. Only the education sector remained unchanged from November 2016.

In summation, core inflation in December 2016 rose by 0.11 per cent compared with November, was up by 1.87 per cent compared with December 2015, and 2016 annual core inflation increased by 1.83 per cent compared with the same period in 2015.

The rise in core inflation from January to December 2016 compared with the same period in 2015 showed narrow amplitude, fluctuating from 1.64 to 1.88 per cent, a result of a steady monetary policy being put to practice, helping the country’s macroeconomic stability and keeping inflation in control.

The current inflation rate of 2016 was calculated by comparing the rate in December 2016 with that of December 2015. Core inflation was calculated by subtracting food, energy, healthcare service and education from base inflation.

The Ministry of Industry and Trade worked together with the State Bank of Viet Nam in 2016 to organise a steady supply of goods to insulate the market from sudden price hikes, and to adjust the exchange rate between VND and US$ to suit the macroeconomic scene.

The year 2017 will see a change in the inflation calculation method, by using the average annual CPI instead of the change in CPI between December of the current year and the previous one, Le Thi Minh Thuy, director of the GSO’s Trade and Service Statistics Department, said.

Lam also expressed the GSO’s concern through a petition to the government proposing several solutions to keep inflation under control in 2017, with the target of CPI increase at four per cent as indicated by the National Assembly.

As such, price adjustment methods must be employed for healthcare services, electricity, water and interest rates, as well as a close watch must be kept on the world oil price to prevent the domestic price from shooting up, affecting 2017 general CPI. 

VNS