Falling demand for food and foodstuffs after Tet helps constrain March inflation


CPI rose 0.21% M-o-M in March, bringing the YTD figure to 0.90%, which is lower compared to a 0.99% rise in the same period last year. As a seasonal factor, declining demand for food, foodstuffs and catering services after Tet holiday caused the CPI of this group to fall 0.87% M-o-M in March, subtracting 0.31 percentage points from the CPI growth. The CPI of tobacco and beverage and garment/footwear groups slid 0.02% M-o-M and 0.12% M-o-M, respectively. On the other hand, the increase of healthcare service fees in accordance with the Joint Circular No. 37/2015/TTLT-BYT-BTC dated October 29, 2015 drove CPI of this group up 9.86% M-o-M and added 0.38 percentage points to total CPI this month. Tuition fees in Thanh Hoa province, which were adjusted up under the Government’s Decree 86/2015/ND-CP dated October 20, 2015, lifted the CPI of the education group by 0.75% M-o-M. Though domestic gasoline prices were reduced twice this month, the impact of an increase in fuel and gas prices in February lagged to March, causing CPI of the transport and the housing and construction materials groups (including gas, water and electricity) to rise 0.39% and 0.50%, respectively. We continue to reiterate our inflation forecast of 5% for 2017 with increasing fuel prices and the cost of healthcare and education being the main drivers.

Source: VCSC

Photo: CBR Investment AG