February CPI falls with spiraling oil prices

Vietnam's consumer price index (CPI) fell by 0.05% in February compared to January and 0.25% from December 2014, according to the General Statistics Office (GSO).

Photo for Illustration (Photo: Thai Thien).

The CPI has been falling for four consecutive months since November 2014, with a 0.27% fall in November last year, 0.24% in December and 0.2% in January this year.

This month was also the first February – the month in which the Tet (Lunar New Year) holiday is often celebrated – to witness a fall in the CPI since 1996.

According to the GSO, the fall in the CPI during the last four months broke the normal fluctuations the CPI records in the months ahead of the Tet holiday.

Normally, CPI records a rise in prices during the months leading up to the Tet holiday, due to rising consumption of goods.

The GSO expert said that plunging oil prices were the primary factor for the falling CPI in February. The domestic oil price dropped nearly 12% in January.

Statistics showed that due to the falling oil price, the transport service rates were reduced by 4.41% in February compared to the previous month, pushing down the country's CPI.

In addition, prices of goods were more stable than during the previous years' Tet holiday, without huge increases in prices, which also contributed to a low CPI.

Statistics showed that the rates of food and catering services – the group with the highest percentage among 11 major groups of goods and services in the CPI basket – increased only 0.53% this month. The food and catering service rates were 3.65% in February 2011; 2.11% in 2012; 2.28% in 2013; and 1.15% in 2014.

Three other groups that also saw a fall in rates included housing and construction materials, transport services and telecom services.

There was a 0.4% drop in the CPI in Ho Chi Minh City and a 0.07% drop in Hanoi in February.

The fall of the CPI in the first two months of this year has signaled that inflation will continue to be restricted to a low level this year.

Although a falling CPI raises concerns about deflation, Planning and Investment Minister Bui Quang Vinh said at a government meeting in January that the fall of the CPI during the last few months was not sign of deflation, but caused by plunging oil and petrol prices in line with world price fluctuations.

(Source: nhandan.org.vn)