The bank’s report suggested inflation would inch up due to consumer price pressures caused by Tet and follows the General Statistics Office announcement that the country’s consumer price index (CPI) in January increased by 1.25% compared to a month earlier, up 7.07% from the previous year.
The working group however believed that CPI would not reach double-digit figures as it did two years ago.
Prices of food and foodstuffs in January rose 1.34% from a month earlier. Prices of apparel products, footwear and other goods significantly increased due to the approaching Lunar New Year.
Medical costs in January were estimated to have increased 7.4%, compared to a rise of only 0.14% last December.
Based on the updated statistics, ANZ estimated, “Vietnam’s inflation rate may fluctuate at 8%-10% this year. As recent loosed monetary policies only slightly affected credit supply and GDP growth rate was still lower than the expected level of 7% to 8%, the pressures on price hikes due to rising demand would be not considerable.”
ANZ also forecast that prices of drugs and medical services would fall to acceptable levels due to government intervention.
ANZ experts warned that the country’s inflation would sharply increase in the middle of this year but would remain controllable.
As a result, the State Bank of Vietnam will continue to apply careful measures during the remaining period of the year in order to realise its target of taming inflation.
The government has also recognised the ineffectiveness of policies to cut interest rates in order to boost lending for private firms.
This means that the government would instead focus on the restructuring in the banking industry as well as dealing with bad debts this year. If the restructuring plan is successful, banks would be able to provide more credit and stimulate economic growth, the report added.
