August CPI seen rising

August’ CPI growth rate is widely forecast to surge over the same period last year. Compared to June, July saw a sudden 0.88 percent decline in food price index which has been taking toll on the CPI growth rate. According to the Price Management Department under the Ministry of Finance, this could signal a potentially reverse direction of CPI growth.

The agency reported the Vietnam’s plentiful rice supply thanks to relatively high yields of summer-autumn crops in southern provinces. The increasingly ample rice stocks in the context of flat demand are expected to bring about stability and perhaps reduction in rice prices.

Yet, the department warned over potential fluctuations in food supply and demand particularly fresh food, fruits and vegetables in affected areas in the event of flood and unexpected weather conditions. Recently, food supply has been adversely hit by prolonged blue-ear disease which has lasted for many months. Bank loans inaccessible for breeders accompanied by a sharp surge in animal feed prices could further drive up food prices.

Also, low yields in ending crops along with recently severe weather conditions have taken toll on vegetable supply pushing up these stuffs’ prices. In the same way, surging demand for sugar and other materials for moon cake production for the Mid-autumn festival has discouraged future price cutting. Thus, foods that account for some 40pct of the country basket of commodities for CPI calculation will undoubtedly be depressing for the August CPI.

What is more, the lackluster performance of the world economy with the euro-zone public debt crisis and American and Japan gloomy economic outlook together with volatile prices of essential commodities and materials on the global market is expected to add to the pressure on domestic prices.

Import prices in July are reported to have experienced an increase over the previous month namely cotton rising 0.4pct, petrol 4.4pct, flour 3pct, clinke 10pct, paper 9.9pct. Also, export prices have seen a similar upsurge with rice prices up 2pct, coffee 0.9pct, cashew nuts 2.4pct, coal 14.4pct, etc.
According to many analysts, world oil prices are predicted to continue their upward surge in the times to come, which could bring down global LPG prices making domestic LPG price falls nearly infeasible.

In recent times, a range of measures have been introduced in attempt to hold down prices of essential commodities. The inter-ministry of Finance and Industry and Commerce has recently unveiled an announcement on 8 July which requests the current import tax and domestic retail selling that was adjusted on 29 March to be maintained for the time being.

Also, the Ministry of Finance officially requested the Vietnam Cement Corporation not to make any selling price adjustments for the time being due to stable prices of materials for cement production such as power, coal and oil prices.

Tags: Vietnam CPI, Vietnam CPI 2011, Vietnam economic, Vietnam economy

Posted by VBN on Aug 5 2011. Filed under Consumer price index, Economy News. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry