CPI in May increased only 0.18%, a positive development for the economy?
 CPI developments over the months. Source: GSO |
The General Statistics Office has just announced the national consumer price index (CPI) for May 2012. Accordingly, the national CPI in May increased by 0.18% compared to the previous month. Compared to the same period last year, the CPI in May increased by 8.34% and compared to December 2011, it increased by 2.78%. In the first 5 months of 2012, the national CPI increased by 13.3% compared to the same period last year.
Of the 11 groups of goods used to calculate the price index, 7 groups increased higher than the general index.
The price index of the food and catering services group decreased by 0.14% compared to April. Of which, the food group decreased by 0.54% and the food group decreased by 0.26% while eating out increased by 0.66%.
Along with the pressure of increasing gasoline prices, the index of the transport group increased by 1.32%.
The housing and construction materials group's price index decreased by 0.07% this month, but in the first five months of 2012 it still increased by 15.15% over the same period.
Notably, other goods and services increased sharply compared to April with an increase of 3.09%. However, in general, in the first 5 months of the year, this group still held back at 11.52%, lower than the general increase.
Not included in the price index, the gold price index decreased by 2.17% compared to the previous month and the US dollar price index increased by 0.06%.
So is inflation falling to the target level in just the first half of the year a positive development for the economy?
The decrease in aggregate demand has had a strong impact on social purchasing power for many months now. Statistics on total retail sales show that the increase is quite low compared to the previous period. The high increase in industrial processing inventory index of over 32% in early April 2012 shows that demand is clearly still weak.
However, low inflation but high lending interest rates have affected production, business and the need for reasonable growth. As a result, many small and medium enterprises are facing difficulties due to difficulty in accessing and absorbing capital; high input costs, slow product consumption, high inventories, leading to a reduction in production scale...
Many businesses had to stop operating or go bankrupt or dissolve. In the first 4 months of 2012, over 17,700 businesses nationwide completed procedures for dissolution and ceased operations, an increase of about 9.5% over the same period.
In that context, the State Bank has taken many strong measures to support liquidity. Through the foreign currency purchase channel, the State Bank has pumped about VND 130 trillion into the market; at the same time, it has net injected about VND 30 trillion through liquidity support channels and VND 30 trillion in targeted refinancing loans.
The interbank market has eased recently, showing that the liquidity of some banks has improved significantly. However, although interest rates have decreased, the economy's absorption capacity is still weak.
As of April 20, 2012, total outstanding credit to the economy is estimated to have decreased by 1.35%. This is still an unusual indicator compared to previous years, when credit growth was always several times higher.
Due to concerns about increasing bad debt risks and to ensure capital safety, many banks have shifted credit flows to safer investment and business channels in the past few months, such as buying government bonds and State Bank bills, instead of increasing outstanding debt.
The Government's report to the 13th National Assembly has just pointed out some signs of economic growth decline, this is a truly worrying assessment.
An obvious sign is that in the first 4 months of the year, 171,639 people registered for unemployment, an increase of 61.4% compared to the same period last year. The not-so-bright economic outlook also makes those who still have jobs reluctant to spend.
Meanwhile, combined with the decline in domestic purchasing power, the impact of price reduction from the world market is also very strong, especially for rice. The food price index has continuously decreased for the past 5 months, in which the Mekong Delta region has the fastest decreasing food price.
According to Vision.net - H
