March CPI lower than expected

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SaigonTimes English - 34 month(s) ago 5 readings

HCMC – Contrary to what experts have predicted, this month’s consumer price index (CPI) in many cities and provinces, including the country’s two biggest cities of Hanoi and HCMC, is forecast to rise slightly from the previous month while in some other provinces the figure is strongly down despite the recent fuel price hikes.

March CPI lower than expected

By Minh Tam and Thanh Thuong - The Saigon Times Daily

HCMC – Contrary to what experts have predicted, this month’s consumer price index (CPI) in many cities and provinces, including the country’s two biggest cities of Hanoi and HCMC, is forecast to rise slightly from the previous month while in some other provinces the figure is strongly down despite the recent fuel price hikes.

The low CPI rise is way below expert expectations. Economist Ngo Tri Long told the Daily that he was surprised when hearing the CPI announcements by local authorities as the domestic market management department of the Ministry of Industry and Trade had earlier forecast the March CPI at 0.4-0.5%.

It is of note that fuel retail prices were hiked by 10% when CPI data were collected. In previous years, any fuel price spike always resulted in a sharp increase of the CPI, so Long cast doubt on the figures released by local authorities.

Echoing Long’s view, another expert said it was difficult to look into the real reason behind the lower CPI rates.

According to this expert, the slower growth of this month’s CPI in these localities is somehow reasonable because the group of transport services and that of housing, electricity, water, fuels and building materials only account for 8.87% and 10.1% respectively of the basket of items used to calculate the CPI while the food and catering services group making up nearly 40% has tumbled this month, he explained.

However, he pointed out, the increase of the groups of transport and housing accompanied with other related expenses would heavily affect the CPI rather than its proportion in the basket of goods for CPI calculation. Therefore, the actual surge of the CPI is definitely higher than reported by local authorities, he asserted.

Most specialists are suspicious of the latest CPI statistics which are widely apart among provinces. For instance, the 10% spike of fuel prices has left varying impacts on cities and provinces, with the transport services group in Hanoi soaring 1.36% versus the 0.65% increase in HCMC.

The big difference in the provincial CPI rates once drew the public attention in the past when the CPI growth in HCMC in September in 2011 was 0.88% compared to a mere 0.2% in Hanoi. Authorities then ascribed the gap to the different structures of goods groups in the basket used for CPI measurement.

Similarly, local media was suspicious of the CPI report by a province in September last year. This province adjusted down the figure from over 1% to roughly 0.9%.

Under the current tough economic conditions, experts suspected a number of provinces might have deliberately given out the fine CPI figures to appease the public.

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