HSBC lowers Vietnam’s inflation forecast to 3.5 percent from its previous forecast of 3.7 percent due to stable domestic food prices, which are expected to help curb headline inflation in the country, according to a report released on June 14 by the bank has been released.
The bank explained that inflation risk in ASEAN countries has increased since early 2022, leading to a sharp rise in both core and headline inflation compared to the period before COVID-19 broke out.
However, the impact varies by country and inflationary pressures have intensified in Singapore, Thailand and the Philippines, while inflation is well under control in Vietnam, Malaysia and Indonesia, according to the report.
But headline inflation in the second group is likely to rise sharply quickly, especially in the context of rising energy prices, it predicted, adding that while world oil prices have “cooled down” from their peak in March, they are still at high levels. , while the price of natural gas continues to rise gradually.
Energy price inflation has also been ongoing in Vietnam for a long time. Transport prices hit an all-time high, surpassing food inflation to become the main driver of Vietnamese inflation, it said. Despite rising energy prices, food inflation has remained subdued, helping to contain the overall rise in headline inflation so far, it added.
In the report, HSBC also raised its inflation forecast for Thailand, Singapore, Indonesia and the Philippines.
After taking into account both inflation and growth, HSBC has also revised its forecast for Vietnam’s operating interest rate in 2022.
While current inflation remains below the 4 percent target, the bank expects persistently high energy prices to continue to push up general prices. Inflation is likely to surpass the State Bank of Vietnam’s 4 percent ceiling at times in the second half of 2022, but only temporarily, the report said. That situation is likely to lead to the bank adjusting interest rates by 50 basis points in the third quarter of 2022 before raising interest rates three times in 2023, by 25 basis points each, the report points out.
By Vietnam News Agency
