Vietnam aims to keep inflation under 5 percent in 2016

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May's consumer price index (CPI) edged up 0.54 percent from April and increased 2.28 percent from the same period last year, according to the General Statistics Office.

The office also said that inflation in the first five months of this year has advanced 1.88 percent from December last year.

Vietnam has seen record high inflation in the month of May for the past five years.

More importantly, although food accounts for 42.8 percent of the 19 goods and services the country uses to calculate consumer inflation, it is not largely to blame for the hike because 11 of commodities are moving higher, said statistics official.

For instance, the average prices of drugs and medical services has jumped by 16 percent from last May, of which medicine prices rose sharply by 20.8 percent on-year and 28 percent from the same period in 2014.

Deputy Prime Minister Vuong Dinh Hue has asked authorities to develop a mechanism to manage prices. Photo by VGP/Thanh Chung

Concerning inflation this year, Deputy Prime Minister Vuong Dinh Hue took into account Vietnam's recent adverse weather conditions including the prolonged drought and saltwater intrusion in the southern Mekong Delta and the mass fish deaths in central provinces.

He also mentioned slower GDP growth in the first quarter that reached only 5.6 percent, lower than the 6.7 percent recorded in the same period last year.

Crude oil prices have probably bottomed out and are expected to bounce back soon, Dinh continued, which will put pressure on the costs of goods and services.

With the aim of keeping inflation between 4 and 5 percent, Deputy Prime Minister Hue has asked relevant authorities to work closely to control fiscal and monetary policies in line with economic developments.

“We won’t let inflation escalate in 2016. Rising consumer inflation in the first few months does not mean we should expect high inflation this year,” said Hue.