Inflation is cooling down

For the first 11M23, Vietnam's average CPI increased by 3.2% yoy.

>> Control inflation expectations

For the first 11 months of 2023, average CPI increased by 3.2% yoy; meanwhile, core inflation increased by 4.3% yoy. The acceleration is on the back of construction materials prices and rent houses, which put the CPI index up (5.9% yoy). Food and catering services increased by 2.9% yoy, of which the food basket increased by 13.2% yoy due to the domestic price of rice remaining at a high level following world rice prices.

Besides, the increase in tuition fees in some localities pushed the education group index up by 7.1% year over year, and the medicine and healthcare services group increased 3.3% due to adjusted healthcare service prices contributing to the month-over-month CPI increase compared to the same period.

The air ticket price index increased by 87.2% year over year, combined with increased travel demand during holidays and summer vacations, pushing up airline expenses and leading the average CPI of the year back to the uptrend.

>> Inflation will remain under control

In addition, the increase in cement and sand prices in line with the price of input materials, along with the high rent of houses, has pushed up the price index, pushing the average price index of the housing and construction materials group up by 6.7% year over year, greatly affecting the overall CPI.

In contrast, the average of oil prices in 11M23 decreased 12.1% year over year, while gas prices decreased 7.5%, acting as limit ing factors for the pace of the average CPI increase.

MBS expected CPI to average 3.4% for the whole year 2023 based on the following factors:. First, it observed that oil prices so far have decreased 18.1% from their peak in September 2023 due to concerns about low demand, but are expected to remain relatively stable around $80 per barrel due to efforts to cut supply from OPEC. Second, the food price index is trending upward as rice prices are expected to rise amid increasing demand in Asian and African markets. Finally, the VND/USD exchange rate rose to 24,300 VND/USD24,500 VND/USD in the last month of the year will exert pressure on most imported goods.

Vietnam's consumer price index (CPI) is forecast to grow between 3.2 percent and 3.6 percent this year, according to the latest projection of the Ministry of Finance. Meanwhile, the General Statistics Office forecasts that the CPI, a main gauge of inflation, will expand by 3.3–3.6 percent in 2023.