According to the general Statistical Office, the Consumer Price Index (CPI) in June 2019 declined by 0.09 percent over the previous month. In particular, the group of transport recorded the biggest decline with 1.73 percent due to the impact of the two adjustments of petrol and oil prices on June 1st 2019 and June 17th 2019 (making the overall CPI to decrease by 0.16 percent). The group of housing and construction materials fell by 0.2 percent mainly due to the 8.79 percent reduction of gas prices in June (making the overall CPI to decrease by 0.11 percent).
Meanwhile, the average CPI in the first six months of 2019 grew by 2.64 percent compared to the average recorded in the same period of 2018. Bao Viet Securities Company (BVSC) pointed out some main reasons. Firstly, the prices of some food items increased by 5.4 percent, in which pork price rose by 14.8 percent (making the CPI to increase by 0.62 percent). It should be noted that the pork price has only started from March 2019 to early June 2019, due to the impact of the African swine flu, while it still increased in the first three months of the year.
Secondly, the price of housing maintenance materials went up by 1.99 percent over the same period of 2018 due to the higher construction demand. Thirdly, the adjustment of domestic electricity price of the Ministry of Industry and Trade led to an increase of 5.84 percent of domestic electricity price in the first six months of 2019 compared to the same period of 2018.
Although the headline inflation is currently maintained at low level, the core inflation has been following an uptrend from the beginning of the year until now, rising from 1.83 percent to 1.96 percent. The increase of core inflation showed that the general price level in the market is still moving up, said BVSC.
In the second half of the year, pork price may be a potential risk to the overall inflation rate as supply comes scarce due to the latent impact of the African swine flu. The oil prices in the short term may also be unpredictable in the context of the US and Iranian political tensions.
On that basis, BVSC said that the administration of monetary policy of the SBV is likely to be maintained with the target of developing M2 and credit for the whole year 2019 by only 14-15 percent. BVSC said that the SBV is unlikely to loosen monetary policy in the near future like other central banks around the world are expected to do.
