Low inflation prompts push to increase public service prices

Vietnam’s average consumer price index (CPI) in the first 6 months of 2019 increased 2.64 percent year-on-year, according to the General Statistics Office (GSO).

Falling food prices as a result of abundant domestic supply, falling telecom prices and domestic gasoline prices from the end of May were reasons for the low inflation in the first half of this year, said Nguyen Van Truyen, deputy director of the Price Management Department of the Ministry of Finance. 

Deputy Prime Minister Vuong Dinh Hue said there is room to consider raising prices, given forecasts of low inflation in the second half of 2019.

According to the Government Steering Committee, inflation this year is expected to remain between 3.17-3.41 percent, lower than the target it previously set of 3.3-3.9 percent, and also lower than CPI growth of 3.54 percent in 2018.

"Given low inflation, it would be convenient to adjust the prices of some public services. However, ministries must consider their timing to avoid raising prices at the same time and putting pressure on inflation," Hue said.

According to a macro report by HSBC released earlier this week, Vietnam could see inflation as low as 2.7 percent this year. High inflation risks still remain, but these will certainly not pose a threat to the inflation rate of 4 percent set by the State Bank of Vietnam, the report said.