Fuel, raw material costs drive up CPI in May

Rising fuel and raw material prices have driven up Vietnam's consumer price index (CPI) in May by 0.38% against April, and 2.86% year-on-year, according to General Statistics Office.

The agency attributed the surging prices to adjustment of domestic gasoline costs in line with the global trend, as well as rising raw material prices due to global supply chain disruption.

Specifically, gas and oil prices jumped by 5.93% and 3.99% respectively, causing transport to have the highest bounce with 2.34% against April and 18.42% against the same period last year.

The Russia-Ukraine war and China’s zero-Covid policy have increased raw material prices, causing the CPI of textiles, footwear, and hats in May to expand by 0.18% from April and 1.32% year-on-year.

The group of family appliances and tools climbed by 0.22% from last month, focusing on items in high demand during summer, like air conditioners, fans, and refrigerators.

Education also experienced a rise of 0.17% as localities raised tuition costs following the fee exemption or reduction given the impact of Covid-19.

CPI climbed by 2.25% on average in the first five months of 2022, but this was smaller than the increases of the same period during 2017-2020.

Despite surging oil and raw material prices, Vietnam's inflation may be well under control this year, at 3.7%, below the central bank’s target of 4%, according to HSBC.

The inflation pressure remains at a low level compared to other ASEAN countries, the bank said in a report released in mid May.

Earlier, Nguyen Bich Lam, former head of the General Statistics Office, on May 12 said he expected Vietnam's inflation to be 4-4.5% in 2022, which could exceed 5% in 2023 in case high inflation rates persist in its key partner economies like the U.S., the EU, and South Korea.

In April, Standard Chartered forecast Vietnam’s inflation in 2022 and 2023 at 4.2% and 5.5% respectively, due to supply-side factors including rising commodity prices, especially given the current global geopolitical tension.