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Vietnam Business » Vietnam Economic News » How high will Junes CPI climb?

How high will Junes CPI climb?

How high Junes CPI increase will be is a hot topic right now, and yet the month wont end for another 20 days. At the end of May 2010, the Taskforce on Domestic Market Management released a forecast on May 26 that the CPI would increase by 0.1-0.2 percent in June.

Experts have released early comments on the consumer price index (CPI) for June 2010. The expected increase is between 0.1 and 0.35 percent.

Just several days ago, some online newspapers quoted a Price Control Agency official (under the Ministry of Finance) as saying that the June CPI would increase by 0.3-0.5 percent.

According to Thoi bao Kinh te Vietnam, an agency official on June 8 maintained that the CPI in June would increase by only 0.2-0.25 percent.

On the same day, the Ministry of Finance asked petroleum distributors to reduce retail prices by 200-500 dong per litre. This means that the petrol price has plummeted by three percent, diesel by 1.5 percent, kerosene 2 percent and mazut by 4 percent.

These price decreases account for 3.17 percent of total consumer spending, which will help the CPI increase by 0.095 percent.

Economists have every reason to believe that the June CPI increase will not be high, as export prices have increased by 13 percent on average in the first five months of 2010. Many goods are expected not to increase further or even decrease slightly in June, especially some input material imports.

In the domestic market, prices have been stable, thanks to the high growth of production. According to the Ministry of Planning and Investment, the GDP in the second quarter of 2010 may increase by 6.2-6.3 percent and in the third quarter by 6.5-7 percent. If compared with the money supply (M2) growth rate of 7.8 percent and the credit growth rate of 7.5 percent over December 2009, the relationship between money and goods appears to be in balance.

Economic analysts also believe that input material increases will not have a heavy impact on June prices as they did on prices in March and April. For example, the electricity and water price increases, which began in March, wont affect price performance in June. The prices of coal and liquidized gas are believed to stay stable. Petroleum prices have decreased twice within 10 days and lending interest rates will tend to decrease.

The Taskforce on the Domestic Market Management analysis shows that most prince on 12 essential goods used to calculate CPI will remain stable in June.

If the CPI increases by 0.2-0.25 percent (as forecast by the official of the Price Control Agency), the CPI increase will slow (the CPI increase of May was higher at 0.27 percent).

Statistics demonstrated that, in the first five months of the year, total retail revenue of goods and services has increased by 27 percent in comparison with the same period of 2009, the highest level so far this year.

Vietnam Business And Financial News Network. Source [english.vietnamnet.vn]

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