Drop in fuel prices contributes to low CPI this year

Tuesday, 2018-12-04 11:27:37
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A fall in prices of petrol has contributed to making the government’s 4% inflation target possible
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NDO - A reduction in global crude oil prices has contributed to a drop in the consumer price index, helping the government to successfully curb inflation at below 4% this year.

By late last week on the London market, the prices of Brent oil and WTI oil, which are two main types of oil traded globally now, were US$60.11 and US$51.18 per barrel, respectively. One month ago, the prices of these items were US$76.05 and US$66.24 per barrel, respectively.

The General Statistics Office (GSO) last week reported that in November, the price of the transport category, one of 11 major categories of goods and services used to calculate the consumer price index (CPI) in Vietnam, saw the lowest drop, by 1.81% against October.

This is due to a 4.1% reduction in the prices of petrol and oil in the domestic market on November 6 and November 11, which led to a 0.17% decrease in CPI.

The November CPI dropped by 0.29% month-on-month.

Furthermore, in November, the prices of a number of items also decreased month-on-month, such as housing and building materials - down 0.64% due to a 9.18% fall in the price of gas, a 0.64% reduction in the price of electricity and a 0.97 % decrease in the price of kerosene.

Also, the prices of catering and food, and posting and telecommunications also went down by 0.14 and 0.06%, respectively.

Nguyen Duc Canh, head of a gas station in Hanoi’s Pham Van Dong street, told VIR that since early November, the average price of gas in the domestic market has reduced by VND40,000 (US$1.74) per tank of 12 kilogrammes to VND349,000 (US$15.17). In Vietnam, many gas firms have also reduced the gas price, such as Saigon Petro, Pacific Petro, City Petro and ELF Gas.

“This is the third time the gas price has decreased since early this year, with a total reduction of about VND73,000 (US$3.17) for a 12kg tank,” Canh said. “It is expected that the gas price will continue its downtrend in December.”

According to the GSO, in the first 11 months of this year, CPI ascended 3.59%, lower than the 3.61% of the same period last year. The rate is expected to well stay at below 4% this year as targeted by the government.

Seven out of 11 major categories of goods and services in Vietnam saw a year-on-year jump in prices, such as housing and building material (3.52%); restaurants and catering services (3.06%); and apparel, headwear and footwear (0.08%). The biggest driver is the increased prices of 11.49% in medicine and health care services.

According to the GSO, prices of foodstuffs, especially husbandry products, are expected to climb from now until the year’s end due to droughts and flooding which have been seriously affecting some regions in Vietnam.

FocusEconomics, which provides in-depth economic data for businesses and organisations in hundreds of nations worldwide told Nhandan Online in a December report on forecasting Vietnam’s economic prospects that “Upward inflationary pressures stemming from higher fuel and food costs threaten the State Bank of Vietnam’s full-year target in the medium-term. FocusEconomics panelists project that inflation will average 4.1% in 2019 and 4.2% in 2020.”

Prime Minister Nguyen Xuan Phuc has noted that special attention must be attached to the control of inflation and macro-economic stability, especially at the end of this year and early next year due to a possible hike inflation caused by growing demand for goods leading to the Lunar New Year.

The prime minister asked Deputy Prime Minister Vuong Dinh Hue to direct the government’s pricing monitoring group and ministries to thoroughly calculate the prices of electricity and healthcare services, and any hike in the prices must be conducted properly in suitable points of time.

Consumer price index of 11 first months over the past eight years

Unit (% on-year) – Source: General Statistics Office

Year

November

11 months

2011

19.83

18.62

2012

7.08

9.43

2013

5.78

6.65

2014

2.6

4.3

2015

0.34

0.64

2016

4.52

2.47

2017

2.62

3.61

2018

3.46

3.59

THU HA