CPI unexpectedly low in April

Many economists admitted that they were surprised that the consumer price index (CPI) for April 2010 increased by only 0.14 percent over the previous month. Nguyen Duc Thang, Deputy Director of the Trade – Services – Prices Department under the General Statistics Office (GSO) was caught off guard too.

Thang, in a recent interview given to Thoi Bao Kinh Te Vietnam, remarked that GSO officers did not think that the CPI increase in April would be so low, but they did know expect a slowdown.

Thoi Bao kinh Te Vietnam: It is quite incredible that the CPI growth in April is so slow at 0.14 percent?

Nguyen Duc Thang: I remember that at the meeting when we announced the CPI increase in March 2010, we predicted a CPI increase for April at 0.3-0.4 percent, higher than 0.14 percent. After we considered mid-month figures, we realized that the prices of many kinds of goods decreased, including food and foodstuff prices. As food and foodstuffs account for a big proportion in CPI calculations, they forced the CPI down.

In April many prices escalated, such as those of steel and construction materials. Yet these products do not account for a big proportion in the basket of goods used to calculate CPI, so these goods were not enough to bolster the CPI.

In general, the prices of many essential goods decreased sharply and nationwide, which helped curb the CPI increase at only 0.14 percent.

TBKTVN: Some experts say that the CPI increase in April was lower than in March because the Tet month was delayed by one month (the 2009 lunar year had two Mays). Do you think so?

Thang: I do not think so. However, it is clear that CPI always stabilizes in April, May, June and July.

TBKTVN: You have said that the food and foodstuff price decreases have led to the low CPI increase in April. Is the rice crop involved?

Thang: Rice exports have been going slowly, while the world’s prices are low. As a result, rice prices in both the north and south are low. In April, the CPI of some cities and provinces even decreased. Including that of Hanoi, Hai Phong, Hai Duong and An Giang.

Rural areas report that prices of foods and foodstuff, goods that are the most difficult to control, have stabilized. As for petroleum prices, the Government has committed to maintain present prices until the end of June. Meanwhile, the steel association has revealed that steel prices have eased.

If the food and foodstuff prices can be stabilized, it would be feasible to curb the price index.

TBKTVN: The April CPI increase could be seen as a positive sign for inflation in 2010?

Thang: In order to curb inflation rate at seven percent in 2010 as decided by the National Assembly, over the next months we must halt the CPI increase at 0.32 percent a month. It will be easy to curb the CPI increase at this level in the second and third quarters of 2010. However, it will be very difficult to do the same in the fourth quarter.

The Government has done everything it needs to do to curb the inflation rate. It has committed to maintaining present electricity, coal and petroleum prices. If a storm hits the central region, then rice cannot be carried from the south to the north, and the rice price will increase.

Thoi bao Kinh te Vietnam

Tags: Vietnam CPI, Vietnam economic, Vietnam economy