VietNamNet Bridge - Vietnam’s consumer price index (CPI) in December increased a record level by 1.98 percent over the last month, raising the CPI for the whole year to 11.75 percent, said the General Statistics Office (GSO) on December 24.

Vietnam’s consumer price index (CPI) in December increased a record level by 1.98 percent over the last month, raising the CPI for the whole year to 11.75 percent.

This year’s CPI rate increased to 9.19 percent against the same level from last year. However, this year’s CPI rate was still two percentage points higher, than the initial target of seven percent, set by the National Assembly at the beginning of the year.

Most products saw an average increase of 0.07-3.31 percent, except for post and telecommunication services, where prices decreased by 0.02 percent.

The highest growth in price was seen in food and beverages, especially food with an increase of 4.67 percent, foodstuffs with 3.28 percent, followed by housing and construction materials with 2.53 percent increase.

Products with more than one percent increase in CPI included garments and textiles, hats, footwear, drinks and tobacco. CPI for housing appliances, entertainment, tourism, transportation, pharmacy and medical services and education, rose by less than one percent.

According to Vu Tien Thoa, Head of the Department of Price Management under the Ministry of Finance, the reason for the double-digit CPI increase, was the inefficient use of investment capital that required an urgent response to monetary policies.

In addition, neither producers nor consumers benefited from the state price policies, because of the unreasonable distribution of goods. The only persons that benefited were the intermediaries, who could make a fortune by speculating. This resulted in a bubble increase in prices.

Experts forecasted that consumer demand on the traditional Lunar New Year will increase by over 20 percent. More money will be poured in the market, as many large projects will be finished by the end of year, creating even more pressure on prices.

Also in December, the gold price index in the free market increased by 5.43 percent over November, pushing the price increase rate for this year to 30 percent. Comparing that to December 2009, a 36.72 percent increase above the same period last year. These figures also show the largest fluctuation of gold prices in the past 15 years.

The US dollar prices also changed rapidly, reflecting the State Bank of Vietnam’s policy on regulating foreign currencies. US dollar price in December increased by 2.86 percent over November and 7.63 percent over the same period last year.

The GSO also noted that in 2011 prices for essential products, such as electricity, coal and gas, would be adjusted on a schedule, according to any rise in the average salary. However, the administrative offices should monitor any changes in price levels, so that they can avoid any sudden increase in price for all products.

Source: SGGP