The slow inflation rate in the first two months of 2014 is not due to low domestic demand but a sign that the government’s attempts to stabilize the economy have taken effect, says a senior official of the Ministry of Industry and Trade.
In February (the first month of lunar new year in 2014) consumer prices climbed only 0.55 percent after mounting 0,69 percent the previous month. This means inflation was at a decade and 4-year low respectively.
Analysts have said the pace of inflation is too slow and a warning that domestic demand is stagnant.
But news website VnExpress on Monday quoted Vo Van Quyen, chief of the trade ministry’s Domestic Market Department, as saying consumption was not responsible.
In fact, consumption over the first two months was much better from the same period last year and translated into the 6.2-percent growth in retail sales of goods and services after excluding inflation, he said.
The figure was 2.27 percent last year.
Binh said the current figures of inflation are seen as “low” only in comparison with the double-digit growths in consumer prices before Vietnam began to implement structural economic reforms a few years ago. Inflation was at 18.58 percent and 11.75 percent in 2011 and 2010.
He said the annual Tet holiday typically saw prices soar, but that did not happen this year thanks to the government’s macro-economic measures, especially its price stabilization policies.