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Roundup: Vietnam's inflation forecast to exceed yearly target

Xinhua, July 8, 2016 Adjust font size:

Vietnamese experts forecast that the country would fail to realize the inflation target in 2016, which should be kept at less than five percent.

Reports from the country's General Statistics Office show that the consumer price index (CPI), the main gauge of inflation, rose by 0.46 percent in June, the highest June increase recorded in the past five years.

Compared with Dec. 2015, the index has increased 2.35 percent.

Inflation control target might not be met if the money supply is not strictly controlled. Therefore, state price management agencies must pay due attention to inflation, local economist Nguyen Tri Long was quoted by local Vietnam's state-run news agency VNA on Friday.

Le Quoc Phuong, Deputy Director of the Vietnam Industry and Trade Information Center said that it is hard to keep inflation below five percent.

In the second half of 2016, the CPI is expected to increase 2.7 to 3 percent, higher than that in the first half of the year, Phuong was quoted by local media as saying on Friday. The expected high growth of credit system during the year will also contribute to pushing up prices.

At a recent conference on price situation held recently in Vietnam's capital Hanoi, representatives of the Ministry of Finance's Pricing Management Department expressed concern that inflation in the second half of 2016 will be under pressure by the state budget balance and continuous price hikes in health care and education services.

Meanwhile, Nguyen Loc An, Deputy Director of the Ministry of Industry and Trade's Domestic Market Department said global political volatilities and decreasing demand in importing countries would negatively affect prices of many products, including oil.

In the domestic market, unexpected price hikes in some cities and provinces are also expected as the country is nearing a season of storms and floods.

Besides the price hike of public services and adverse weather, a rising money supply, foreign exchange pressures and price hikes of imported products might be other reasons for the increase, Long said.

Long suggested that in the future, money policies should be coordinated closely with macro-economic stability. Enditem