Vietnam inflation pressure on the rise

By Bach Quang
Mon, October 31, 2022 | 11:01 am GMT+7

Vietnam’s consumer price index (CPI) in October rose 4.16% from December 2021 and 4.3% year-on-year, reflecting rising inflationary pressure.

On average, the CPI in the first 10 months of the year increased by 2.89% over the same period last year.

Core inflation increased by 2.14%, which reflects fluctuations in consumer prices mainly driven by the price of food and energy. Core inflation is a measure of inflation that excludes some volatile commodities such as food and energy.

 Vietnam's consumer price index has increased by 2.89% in the first 10 months of 2022 from one year earlier. Photo courtesy of Labor newspaper.

Vietnam's consumer price index has increased by 2.89% in the first 10 months of 2022 from one year earlier. Photo courtesy of Labor newspaper.

The gold price index in October went up by 0.5% from September and 4.8% over the same period last year. The average hike in the last 10 months was 6.08%.

October's U.S. dollar price index increased by 1.84% over the previous month and 5.42% year-on-year. The 10-month average climbed up 1.17%.

Vietnam is facing rising inflationary pressure due to surging prices of energy and input materials and the U.S. Federal Reserve’s interest rate hikes.

In a release last Friday, Fitch Ratings said it forecast that inflation in Vietnam will exceed the State Bank of Vietnam's target in 2022 at an average of 4.3%, and remain at about 4% in 2023 and 2024, under its baseline.

In its October edition of Vietnam Macro Monitoring released last week, the World Bank noted the country's consumer price index (CPI), a gauge to measure inflation, is approaching the authorities’ target of 4%, after accelerating from 2.9% in August to 3.9% in September. Core CPI also moved in tandem as it increased from 3.1% in August to 3.8% in September.

Vietnam should be "ready to consider further tightening of monetary policy" to ensure inflation remains anchored amidst its strong economic recovery and global uncertainties, says the bank.

The U.S. dollar has surged to record highs against the Vietnamese dong at Vietnamese commercial banks, while deposit interest rates have kept rising following the State Bank's deposit rate ceiling hikes.

As a result, the State Bank of Vietnam increased its regulatory interest rates on September 23. The government has been seeking to limit inflation to 4% this year.

The country’s total retail sales of consumer goods and services in October was estimated at VND486,400 billion ($19.59 billion), up 1.5% from September and 17.1% over the same period last year.

In the 10 months of the year, total retail sales of consumer goods and services was VND4,643,600 billion ($187 billion), up 20.2% over the same period last year. The figure for the same period last year was down 5.1%.

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