Market research firm Market Intello has forecast that Viet Nam’s inflation this year may fall to below 3 per cent, lower than the rate of 3.8 per cent it predicted last month.

According to the company’s latest macro-economy report, the inflation rate was trending downward because of falling prices of fresh foods as well as oil and petroleum products.

Data from the General Statistics Office showed that Consumer Price Index (CPI) decreased 0.53 per cent in May compared with April, pushing inflation down to 3.19 per cent, the lowest since September 2016.

Price sub-indices of foods and food services plunged to the lowest in 16 years, indicating strong growth in supply and weakening demand. The main reason behind this was a price drop of pork caused by the oversupply of pigs and Chinese traders’ move to halt purchases.

The diplomatic crisis between Qatar and other Gulf states has affected the recovery of global crude oil prices, indirectly affecting the Vietnamese Government’s plan to exploit one million tonnes of oil. One of the Government’s short-term solutions to support economic growth is to pump out an additional one million tonnes of crude oil, Market Intello Managing director Dinh Tuan Minh said.

The plan will work well if crude oil prices rebound, otherwise the extra exploitation will lead to more losses, he added.

The market researcher kept its May projection of 6.1 per cent for the country’s economic growth this year.

Due to lower CPI, the interest rate will continue to inch downwards, but the contraction should not be significant as the credit growth rate is higher than that of deposits.

The US$/ VND exchange rate increased by 0.5 per cent this year, lower than the previous forecast of 1.5-2 per cent, thanks to Viet Nam’s stable trade balance, positive capital account and stronger foreign exchange reserves. — VNS