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Unseasonably low CPI rise bodes well for year ahead

Update: January, 31/2012 - 10:05

HA NOI — The Consumer Price Index (CPI) increased by 1 per cent in January in comparison with the previous month, the smallest increase for any January during the past 10 years, according to the General Statistics Office (GSO).

January's CPI marked the sixth consecutive month of increases of less than 1 per cent. This has been seen as a positive result, since the CPI in January each year usually experiences a dramatic surge following the Tet (Lunar New Year) holidays. However, in January this year, only four out of 14 commodity and service groups saw an increase of more than 1 per cent due to Tet and a rise in the price of electricity which was adjusted at the end of December last year. Specifically, garments, hats and footwear rose by 1.97 per cent; housing including rent, electricity, water, gas and construction materials, 1.71 per cent; foodstuff, 1.41 per cent and beverage and tobacco, 1.17 per cent.

Prices of two commodity and service groups declined, including posts and telecoms, down by 0.01 per cent and food, 0.14 per cent.

Meanwhile, prices of eight other groups increased slightly by less than 1 per cent, including restaurant services, 0.96 per cent; entertainment and tourism, 0.93 per cent; transport, 0.66 per cent; pharmaceutical products and healthcare services, 0.25 per cent; and education, 0.02 per cent.

According to GSO, the slow pace of CPI increase in January this year was a in part result of the State Bank of Viet Nam's tightened monetary policies.

Nguyem Cam Tu, deputy minister of Industry and Trade, told VnEconomy news website that many provinces and cities had used their local budget funds to stockpile essential commodities, helping stabilise local markets during the Tet holidays. In addition, US dollar and gold prices were kept stable in January and also contributed to the low inflation rate.

According to a report submitted to Prime Minister Nguyen Tan Dung by the Ministry of Industry and Trade, the country's total retail sales value topped VND196 trillion (US$9.1 billion) in January, an increase of 3.2 per cent and 22 per cent compared to December and January last year, respectively, showing that consumption increased dramatically during Tet.

The GSO said a slight increase of CPI in January was considered a good sign for curbing inflation during the rest of the year to less than 10 per cent.

Experts forecast the CPI for 2012 to be lower than initially targeted, which will help commercial banks reduce lending interest rates and pump more money to businesses that have been grappling with difficulties in securing funds for production.

In the two major cities of Ha Noi and HCM City, CPI increased by 0.96 per cent and 0.89 per cent in January, respectively. — VNS

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