Ho Chi Minh City
Vietnam’s inflation slowed for a tenth month to the lowest level in more than two years, leaving room for further interest-rate cuts to support growth.
Consumer prices climbed 6.9 per cent in June from a year earlier, the General Statistics Office said in Hanoi yesterday, the lowest since December 2009 and down from 8.34 per cent in May. The median of five forecasts in a Bloomberg News survey was for a 7.5 per cent rate.
The pace of price gains has eased as slowing economic growth crimped consumption and concerns over the health of Vietnam’s banking industry led to a contraction in outstanding loans through April. Gross domestic product expanded the least since 2009 last quarter, and the central bank has reduced borrowing costs for four straight months to shield against a faltering global recovery.
“Decelerated global commodity prices, especially food, and lower-than-expected domestic demand growth” are helping lower the inflation rate, Hai Pham, a Singapore-based analyst at Australia and New Zealand Banking Group, wrote in a note this month. ANZ said it has revised its year-end inflation forecast for Vietnam to almost 7 per cent from 9 per cent to 10 per cent previously.
The finance ministry on Thursday said it had cut petrol, diesel and kerosene prices after global costs fell. The government is targeting inflation of 7 per cent to 8 per cent this year, and a 6 per cent expansion in GDP, Deputy Prime Minister Nguyen Xuan Phuc said on June 15. On Thursday, Vu Viet Ngoan, chairman of the National Financial Supervisory Commission, said annual inflation may slow to 5 per cent to 6 per cent by year-end.
Slower growth
Prices in June fell 0.26 per cent from the previous month, the Statistics Office said. Food costs rose 6.3 per cent from a year earlier and slipped 0.23 per cent from the previous month.
Vietnam should prioritise containing inflation even if it means accepting “somewhat slower growth” in the short term, the International Monetary Fund said in June. Price gains will probably reverse their downward trend in the second half of the year, and policy easing may “cause inflationary pressure to re-emerge” in three to four months, the World Bank said in June.
