JP Morgan Chase: Vietnam inflation bounces back

Vietnam’s consumer price index (CPI) increased 2.2 percent September compared to the previous monthly average rise of 0.2 percent, but it is unlikely to rocket by the year’s end.

  • CPI rises sharply in September

In its report released on September 24, JPMorgan Chase said that the country’s September CPI soared nearly 6.5 percent compared to the same period last year, higher than the forecast of 5.8 percent given by JPMorgan Chase and 5.2 percent predicted by observers.

The report attributed the sharp CPI rise in September to four groups of goods and services, including health, education, transportation and food-foodstuff.

JP Morgan’s Matt L Hildebrandt predicted rising inflation at the end of the year together with the increases in prices of aforementioned goods and services, except medical group.

However, in the context of weak economic growth in the world and Vietnam, JPMorgan Chase said that the CPI would not jump at the end of this year as it did in the last few years.

But, the report also said that it is no easy task to maintain the year-on-year inflation rate of 5 percent.

Inflation will continue towards the threshold of 9 percent during the remaining months of the year, it said.

On this basis, JPMorgan Chase said that the State Bank of Vietnam (SBV) can stop cutting interest rates until the end of this year.

Earlier, it predicted that the central bank would lower interest rates by 100-200 basis points within this year.

According to JPMorgan Chase, low and stable inflation will help Vietnam stabilise its balance of payments, the forex rate of the local currency and foreign currency reserves.