HSBC forecasts VN’s Stable Inflation Rate at 3%

Illustration photo

Inflation should remain below the State Bank of Viet Nam (SBV)’s 4% inflation ceiling this year, allowing the SBV to maintain its accommodative monetary policy throughout 2021,” stated the bank’s latest report.

HSBC expected the central bank to keep its refinancing rate unchanged at 4%.

Viet Nam’s February month-on-month inflation momentum rose by an eight-year-high pace at 1.5%.  After a one-off electricity charge subsidy from Electricity Group Vietnam (EVN) in January, electricity prices jumped 20% month-on-month. Meanwhile, rising food prices and higher transport costs also contributed to raising inflation rate.

While electricity price volatility is perhaps a one-off administrative adjustment, food prices and transport costs are worth watching closely, as they both weigh heavily in the overall CPI basket, with weightings of 34% and 10%, respectively, according to the bank.

Since the end of 2019, higher pork prices have pushed up food inflation, even to the extent that headline inflation temporarily breached the “4% inflation ceiling” for four consecutive months./.

By Kim Loan