Low Consumer Price Index (CPI ) right ahead of the most exciting shopping season (Solar New Year and Lunar New Year occasions) shows a severe fall in purchasing power. The economy is gloomy and people are tightening their purse strings.
According to the General Statistics Office (GSO), CPI in November only witnesses an increase of 0.47 percent compared to that of October. Accordingly, the CPI of November is 6.52 percent higher than that of December 2011 and 7.08 percent than that of the same period last year. On average, CPI in the 11 first months of 2012 has gone up by 9.43 percent compared to that of 2011.
Dr Vu Viet Ngoan, Chairman of the National Finance Supervisory Committee, said that despite the fact that there was a high likelihood that CPI of 2012 would stop at 8 percent (compared to 18.13 percent in 2011), this growth rate was still high against what citizens and enterprises could withstand.
However, there are implicit concerns behind this good news that inflation is controlled and prices stable. The fact that CPI goes down by half in November against that of October is abnormal because since 1999, CPI in November has usually been higher than that of October. The two largest cities, Hanoi and Ho Chi Minh City, both announce their low increase, just 0.22 and 0.1 percent, respectively.
November is the month prior to the most exciting shopping season of the year. As usual, prices are pushed up to a new platform on Lunar New Year occasion. Last year, prices were brought down even on Tet occasion. This year, the situation even seems to be quieter.
In November, the group of medicines and medical services continued to see a rise of up to 5.16 percent due to the decision to raise hospital fees of many provinces and cities. As of November 2012, medicines and healthcare services have witnessed the fifth month of price soar.
The group of foodstuff, outdoor eating and drinking services went down by 0.1 percent against that of the previous month. This is attributed to the decrease of 0.21 percent of the foodstuff which accounts for a large proportion. The group of medicines and medical services contributed a growth of 0.29 percent which makes up over 60 percent of the increase of CPI in November. Also since July 2012, this group has accounted for 50 percent of CPI growth. These figures show a fact that citizens have to spend an increasingly amount on medical demand which they have no alternative.
CPI’s lower increase in November against that of October is unusual, proving that purchasing power is weaker than that of earlier months. CPI’s reduction is not a positive sign of the economy.
Economic experts are concerned about CPI’s fall but all the difficulties of the economy have been banked from early this year and people’s endurance is fading. Accordingly, CPI in the last month of the year is judged not to see any surprising increase although this is the period for it to go up.
The economy is facing obstacles. Many industries resort to laying workers off and enterprises have to close down or operate perfunctorily. Sectors with rapid growth like finance and banking also get employees redundant and cut down salary and bonus. Job loss and reduced income will result in lower consuming demand. Prices will, therefore, go down naturally.
Prices of commodities are in a decreasing trend but there remain lots of factors which affect Vietnamese economy. Vietnam is now being challenged with severe trade and budget deficit as well as decreased growth rate. Life of people, particular low-income group, farmers, blue-collar workers and civil servants is getting ever harder. Inflation has lasted for years. Despite relatively stable prices this year, job loss and reduction forces consuming power to wear out.
Statistics shows that spending on education is also on a steep decrease trend, which proves that many households in Vietnam are having difficulties generating their income.
CPI’s lower increase this year against that of the previous year and the target set for the whole year of 2012 is not attributed to positive factors such as higher investment effectiveness, productivity and greater supply of goods and services, etc. The growth rate of total retailed sales of consumer goods and services after excluding price rise factor went down in 2011. This year, such rate is only half of that in 2010 and years earlier.
Le Minh
Vietnamese
