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Vietnam inflation seen rising in June

Publication Date : 12-06-2014


Inflation in Vietnam is seen rising due mainly to increases in the costs of health care services.

According to Vietcombank Securities Co (VCBS), the country's consumer price index (CPI) in June would likely increase by between 0.5 and 0.6 per cent from the level in the previous month.

The anticipated hike is significant when compared to the rise in the past few months. According to the General Statistics Office, CPI's rise was low at 0.08 per cent in April and 0.2 per cent in May.  It even went down by 0.44 per cent in March.

VCBS said the hike in health-care service fees in HCM City from June 1 would likely push up the city's CPI in the month by 5.2 per cent.

According to a decision of the HCM City's People Committee, higher charges will be applied to 2,000 types of medical services, including check-ups, beds for in-patients, technical services and surgeries, in the city's 378 public hospitals.

With this year's inflation anticipated to be about 5 per cent, VCBS said it would be difficult for the central bank to further cut the deposit interest rate next month.

Lending rates will also likely remain unchanged, and so will exclusive old loans with high rates of more than 13 per cent.

Nguyen Thi Hong, director of the central bank's Monetary Policy Department, affirmed that the central bank would maintain the current deposit interest rate until the end of the year, provided there would be no sudden change in the CPI.

Hong said that commercial banks might reduce the lending rate by 1 to 2 per cent this year if conditions permit.

In a report on banking activities in the week ending May 30, the central bank said that deposit and lending interest rates in dong had remained stable.

It said that commercial banks offered dong deposit interest rates at 0.8 to 1 per cent per year for demand deposits and those with maturity of less than one month; 5.5 to 6 per cent for term deposits from one to six months and 6 to 7.5 per cent for deposits between six months and a year. They also offered 7.5 to 8.3 per cent for deposits with maturity of more than one year.

Lending interest rates in domestic currency for five prioritised sectors, including agricultural producers, exporters, small and medium-sized enterprises (SMEs), supporting industries and hi-tech businesses, were set between 7 and 8 per cent. Other sectors were charged lending rates of 9 to 10 per cent for short-term loans and 10.5 to 12 per cent for medium and long-term loans.

Businesses with healthy and transparent financial positions and viable business plans could borrow at 6 to 7 per cent per year.


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