ANZ says Inflation will continue to fall
(VOV) -Vietnam’s consumer price index (CPI) in March fell to 6.64 percent, year on year, compared to 7.02 percent in February.
The monthly CPI level fell by 0.19 percent, according to the Australia and New Zealand (ANZ) Bank’s latest report released on March 25.
All CPI components registered significantly slower sequential gains. The transport, and food, beverage and tobacco components even registered negative month-on-month figures.
The month-on-month drop was partly due to the de-escalating of seasonal high prices during the lunar New Year (Tet) holidays but, according to the report, the key factor moving forward is healthcare .
Healthcare was the main driver of inflation for most of the second half of 2012. From July 2012 to January 2013, month-on- month readings for this component ranged from 3.4 to as high as 17 percent. However, healthcare prices increased less than 1 percent per month during the period.
Given the faster-than-expected slowing of healthcare related inflation, the ANZ is revising its inflation forecast for 2013 from 8-10 percent to an average of 6-8 percent. The bank also sees a good chance of headline inflation ending the year at slightly above 6 percent.
The State Bank of Vietnam (SBV) has already expressed its willingness to further reduce rates if inflation remains on track at 6 percent through the end the year.
With domestic growth still grindingly slow and the effects of banking system reforms likely to take some time before credit can flow back into the economy, the ANZ says that rate cuts could be implemented to help ease some of the constraints on the demand for capital loans.