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Inflation possibly hits the target of 5%

15:39 | 12/10/2016

VCN - In the Macroeconomic Report for the 4th quarter published on 11 October, 2016, the Vietnam Institute for Economic and Policy Research (VEPR) judged that growth in inflation in the last months of the year was inevitable.

inflation possibly hits the target of 5
In the 4th quarter, two service groups of Health and Education were adjusted respectively. Picture for illustration: DươngNgân.

Accordingly, in September alone, CPI rose 0.54%, in which, the contributions of Education were up to 0.42%. While core inflation still remained at around 1.8%, headline inflation increased relatively quicklyand reached the limit before the slowdown at the end of 2014.

Compared with the same period last year, headline inflation of the 4th quarter reached 3.4%, meanwhile the core inflation was at 1.85%. It showed the effects of price adjustment in commodity by the State’smanagement on the general price level.

In the 4th Quarter, two service groups of Health and Education were adjusted respectively. Earlier, since the 2nd Quarter, the inter-ministries Health and Finance has decided to split adjustments instead of one as originally planning. Therefore, the 3 next adjustments as planned in the last 3 months will impact slightly on CPI by adjusting in the provinces which have lower health insurance rates.

“Growth in inflation in the last months of the year is inevitable, when new medical service prices are adjusted in 16 provinces in the 4th Quarter. Energy prices are recovering as world food prices are a mystery. Meanwhile, money supply which is still being adjusted is rising faster than the same period in 2015. Those factors caused inflation to hit the target of 5% set by the National Assembly”, Dr. NguyễnĐứcThành, President of VEPR said.

Thus, the VEPR representative still thinks that the policy-making bodies should be careful in adjusting monetary policy. Particularly, it should be flexible in adjusting the credit growth plan in the 4th quarter and early 2017, in the case of inflationrisks.

According to the VEPR representative, investment in the 4th quarter was not much of a positive improvement compared with the first half of the year. Accordingly, the amount of foreign investment in Vietnam is rising rapidly, total social investment has signs of slowing in the 4th quarter. In particular, the regional capital of FDI was up to 82,2 trillionvnd in the quarter (commulativethe first nine months reached 240.4 trillionvnd), a rise of14% compared with the same period in 2015. The growth level is lower than the last quarter as well as the same period last year.

State regional capital has remained stable and increased by 5.7%, cumulative the first 9 months rose by 7.2% and reached 378.8 trillionvnd. Meanwhile, non-state sector investment only grew by 10.3%, the lowest in the last four quarters. Comulative the 3 sectors, social investment in the first nine months reached 1,006.9 trillionvnd in current prices, increasing 9.6% compared with the same period in 2015.

By Hoai Anh/ KieuvOanh