July CPI hits eight-year record low

July CPI hits eight-year record low

Vietnam’s consumer price index (CPI) in July declined for the second consecutive month, falling 0.29 percent, recording the lowest level in the month since 2004, General Statistics Office (GSO) reported on July 24.

As a result, the seven-month CPI increased only 2.22 percent against December 2011 and 11.2 percent compared to the same period last year’s average data.

Nguyen Duc Thang, head of the GSO’s Pricing Department, said that the July situation was due to the sharp decline in prices of three key commodity groups, including food-restaurant services, housing, water, electricity, fuels and building materials, and transportation.

Hanoi and Ho Chi Minh City, the country’s two largest cities, which accounted for 30 percent of the nation’s price index, also saw a dramatic fall of 0.29 percent and 0.57 percent, respectively.

July CPI clearly showed that people are tightening their purse strings in the context of a gloomy economy, while low credit growth, high inventory level and increasing number of bankrupt enterprises also contributed to the price drop, Thang said.

Of the four groups that saw fall in prices, transport recorded the highest decrease and post and telecoms scored the lowest. Prices of medicine and healthcare services saw the largest increase of 3.36 percent.

Thanks to the abundant supply, food and foodstuff prices dropped by a dramatic 1.49 percent against last month.

Thang predicted that CPI in August will increase due to the simultaneous rise in prices of healthcare services, fuel, electricity and other services.

According to Dr. Le Dinh An, former Director of the National Centre for Socio-Economic Information and Forecast under the Ministry of Planning and Investment, August CPI may continue to fall if the disbursement of public investment is not improved and economic obstacles, such as low credit growth, and high level of bankruptcy and inventory, are not removed. This year’s inflation may hover around 5.5 percent and GDP growth may hit 5 percent, An said.

vietnamnet