Rising oil prices fuel October inflation (3.6% yoy)


October CPI rose 0.33% MoM and 3.89% YoY, down from 0.59% MoM and 3.98% YoY in September. The upward pressure stemmed from 1) the transportation group, which saw the strongest hike of 1.55% MoM due two upward adjustments on domestic retail gasoline prices on Oct 6 and Oct 22, 2) Education, up 0.58% MoM after seven provinces/cities raised their school fee (49 provinces/cities raised school fee in September), 3) housing and construction materials rose 0.31% MoM due to rising gasoline prices and 4) food and food stuffs, up 0.22%, mostly attributed to higher prices of rice (+0.99% MoM) and pork (+0.67% MoM vs +0.65% MoM in September).

As of the end of October, CPI rose 3.54% YTD, equivalent to an average CPI increase of 3.6% YoY, lower than 3.71% in 10M 2017 and the Government’s target of 4%. Meanwhile, average 10M core inflation came in at 1.43%, which is also below the target range of 1.6%-1.8%.

For the coming month, we see less inflation pressure from education (as almost all provinces/cities have completed raising education fees) and transportation given a decrease in global oil prices recently. Pork prices could continue rising due to higher demand at year-end amid potential risks from African Swine Fever, but so far they have become more stable. Given 10M results, we expect full-year inflation to be under the Government’s target of 4%.

Source: VSCS / GSO

Photo: VAM