Vietnam's inflation in 2014 drops to 4.09%

The inflation rate in 2014 is estimated at 4.09% as consumer prices in December declined by 0.24% from the previous month, the General Statistics Office (GSO) has reported.

Consumer prices in December were down by 0.24% from the previous month. Photo: Huu Chi

Over the past twelve months, consumer prices rose by 1.84%, down from the 2.6% pace seen in November.

A report by the GSO shows that transport costs posted the largest one-month decrease in December, down 3.09% as the prices of petrol continued to fall in line with the global trend.

Earlier this week, petrol prices dropped by more than VND2,000 per litre to the lowest levels in four years.

Building materials and utility services as a single group also dropped by 0.99% in December, mainly driven by falling gas prices.

Deputy head of the GSO’s Price Statistics Department Do Thi Ngoc said this is the second time in the past ten years that consumer prices have decreased in December with the other in 2008 when the world economy was in a crisis.

She added that the inflation rate of 4.09% is relatively low in the past ten years, with prices increasing at the average pace of 0.15% per month.

Ngoc said low inflation will allow the central bank to ease the monetary policy further, encourage consumer spending and help enterprises reduce their borrowing costs.

The GSO official stated that there is no ground to say that low inflation is the result of weak demand as price-adjusted retail sales in 2014 still grew at an estimated 6.5%, higher than the figures posted in previous years.

Ngoc stressed that low inflation in the past two years is partly contributed by a more stable consumer sentiment as Vietnamese consumers no longer hoard goods during the Lunar New Year and other major festivals.

The GSO report also noted that the difference in exchange rates between the official and open markets in 2014 was reduced, and strong sales of foreign currency by companies and a large amount of remittance helped increase the foreign reserves.

In 2014, the price of the US dollar was rather stable, up slightly by 0.56% from the previous year.

At the same time the gold market was also brought under control as low inflation and a stable domestic currency undermined the role of this precious metal as a safe haven, the GSO said.

On average, gold prices in 2014 declined by a sharp 11.49% compared with 2013.

(Source: nhandan.org.vn)