Vietnam’s CPI growth set to expand up to 3.7% in 2023

Vietnam’s CPI growth set to expand up to 3.7% in 2023

This projection is lower than the original target set at the beginning of the year, which was to keep inflation below 4.5%.

The Ministry of Finance (MoF) presents two inflation scenarios for the current year. In the best-case scenario, it anticipates a 3.2% increase in the Consumer Price Index (CPI), while in the worst-case scenario, the CPI is projected to rise by 3.7%.

Deputy Prime Minister Le Minh Khai at the meeting. Source: VGP

The figures were mentioned at the August 3 meeting of the Steering Committee on Price Management chaired by Deputy Prime Minister Le Minh Khai.

In the first scenario, the Ministry of Finance forecasted an average year-on-year increase in the CPI of 3.2%. This projection is based on a 3% increase in food prices, an 8% increase in housing rental costs, a 3% increase in housing maintenance materials, a 4% increase in medical service prices, and a 10% decrease in gasoline prices.

In a less optimistic case, the MoF forecasts a higher CPI increase of about 3.7% for the year. This scenario assumes a less than 5% decline in gasoline prices, a 5% increase in food prices, and a 6% increase in medical service prices.

The ministry also reported that the supply and prices of essential commodities have remained stable and in line with the operating scenario of the Price Management Steering Committee. In addition, measures such as lowering interest rates and maintaining a stable exchange rate have been implemented to support businesses and individuals. By the end of July, the State Bank of Vietnam (SBV) had made net purchases of US$3.07 billion from credit institutions to bolster the country's foreign exchange reserves.

Customers at a supermarket in Hanoi. Photo: Cong Hung/The Hanoi Times

Overall, the MoF believes there is room for price policy maneuver in the year's remaining months and offers a relatively optimistic outlook for inflation control.

Based on the scenarios provided, the MoF predicts that the average CPI will rise between 3.2% and 3.7% this year. This projection is lower than the initial target set at the beginning of the year, which was to limit the increase to 4.5%.

The General Statistics Office (GSO) and the SBV also released their inflation forecasts. The GSO expects the CPI to increase by 3% to 3.5% if the price of educational services remains stable, according to the roadmap. Meanwhile, the SBV predicts an average inflation rate of around 3.7%, with a possible range of plus or minus 0.5%.

Deputy Prime Minister Le Minh Khai stressed the importance of closely monitoring the oil market and being ready to take appropriate measures. He urged the Ministry of Industry and Trade (MoIT) to implement effective solutions to ensure a stable petroleum supply for the domestic market and avoid shortages or disruptions.

MoIT has previously asked Electricity of Vietnam (EVN) to provide quarterly updates on the electricity price plan to ensure compliance.

For agricultural products, the Ministry of Agriculture and Rural Development, in coordination with MoIT, is closely monitoring market fluctuations, production, and supply, especially for farm products during peak seasons. The aim is to guide production and business activities, address factors that could affect prices, and safeguard the interests of the people and businesses.

Deputy Prime Minister Khai has asked ministries, sectors, and localities to ensure a sufficient supply of goods, especially essential items such as food, consumer goods, and services in the coming months.

Hanoi Times