Vietnam’s inflation forecast to stay below 4% in 2018: Finance Ministry

The Ministry of Finance has constructed three scenarios for inflation in 2018, with the consumer price index (CPI) in all circumstances staying below 4%, the target set by the National Assembly.

Vietnam’s inflation forecast to stay below 4% in 2018: Finance Ministry

In the first scenario, food prices remains relatively stable and only rise slightly during the holidays.

Hikes in healthcare costs in the first quarter are projected to increase the CPI by 0.17%, while wage increases and higher power costs will drive up the CPI by 0.14% and 0.1% respectively.

A 5% increase each in petrol and gas prices will make the CPI increase by 0.28% and 0.06% respectively.

After factoring in these price rises, the average CPI in 2018 is expected to rise by 3%.

In the second scenario, which is largely the same as the first one, with the exception that pork prices rise by 7% at the end of the year and petrol and gas prices increase by 10%, the average CPI in 2018 will rise by 3.4%.

Meanwhile the average CPI will increase by 3.9% in the third scenario, assuming a 15% rise in pork prices and 15% increases in petrol and gas prices with other price increases the same as in the first scenario.

According to the Ministry of Finance, Vietnam’s average inflation in 2017 fell from 5.22% in January to 3.61% in November. The CPI in December last year rose by 2.6% from 12 month earlier.

The average CPI in 2017 rose by 3.53% against 2016 mainly as a result of increases in healthcare, education and energy costs, rises in the prices of building materials and basic wages.