I. Overview of the Price Situation in 2024 and January 2025
In 2024, the global commodity market experienced significant volatility due to the political, economic, and social factors affecting various countries. Military conflicts, political instability, and tensions continued to escalate in some regions. Global economic and trade recovery remained slow and fragile, with reduced aggregate demand and investment. Currency exchange rates and interest rates were unpredictable. Natural disasters, droughts, floods, and climate change became increasingly severe, adversely impacting socio-economic development and people's lives. Central banks in some major economies continued to cut interest rates as inflation neared the 2% target. On December 12, 2024, the European Central Bank (ECB) reduced interest rates by 0.25 percentage points to 3% per annum for the fourth time in the year. On December 18, 2024, the U.S. Federal Reserve (FED) also cut rates by 0.25 percentage points to 4.25%-4.5% per annum. In December 2024, inflation in the U.S. increased by 2.9% year-on-year, while in the Eurozone, inflation was 2.4%. In Asia, inflation in December 2024 was as follows: India 5.2%, Japan 3.6%, the Philippines 2.9%, Indonesia 1.6%, and South Korea 1.9%. In Vietnam, inflation was kept under control at a level suitable to support economic growth, with the CPI in December 2024 rising by 2.94% compared to the same period last year.
Domestically, the government and the Prime Minister took proactive, decisive, and close actions to address difficulties, promote growth, maintain macroeconomic stability, and control inflation. Measures included ensuring the smooth operation of the supply chain, reducing lending interest rates, stabilizing the foreign exchange market, boosting public investment disbursement, implementing credit support packages, reducing VAT for some goods and services, and cutting environmental protection taxes for gasoline and oil. These actions aimed to support businesses and citizens, while also monitoring the supply-demand dynamics of essential goods and services to implement appropriate management measures. As a result, commodity prices and services in the market generally did not fluctuate unusually, and inflation was under control. The average CPI in 2024 rose by 3.63% compared to 2023, with core inflation increasing by 2.71%.
The consumer price index (CPI) for 2024 increased by 3.63% compared to 2023, reaching the target set by the National Assembly, primarily driven by price changes in several groups of goods:
Food and food services: The index rose by 4.03%, contributing 1.35 percentage points to the overall CPI. Specifically:
Rice: Prices increased by 12.19%, contributing 0.45 percentage points to the CPI, mainly due to the rising export prices and higher domestic consumption during holidays and festivals.
Food: Prices rose by 2.7%, contributing 0.58 percentage points.
Dining outside the home: Prices rose by 3.99%, driven by increased demand and rising labor costs.
Housing, electricity, water, fuel, and construction materials: The index rose by 5.2%, contributing 0.98 percentage points to the CPI, primarily due to a 7.68% increase in household electricity prices, reflecting increased demand and adjustments to retail electricity prices. Rent for housing and owner-occupied housing (equivalent rent) increased by 4.6%, contributing 0.48 percentage points to the CPI.
Healthcare and medical services: The index increased by 7.16%, contributing 0.39 percentage points to the CPI due to adjustments in medical service fees under Circular No. 22/2023/TT-BYT in November 2023 and Circular No. 21/2024/TT-BYT in October 2024.
Education: The index rose by 5.37% due to tuition fee increases in the 2023-2024 and 2024-2025 academic years, contributing 0.33 percentage points to the CPI.
Transportation: The index rose by 0.76%, contributing 0.07 percentage points to the CPI.
In January 2025, the CPI increased by 0.98% compared to the previous month due to adjustments in healthcare service fees following Circular No. 21/2024/TT-BYT, and increased transportation and food prices during the Tet holiday period. Compared to the same period in the previous year, the CPI in January 2025 increased by 3.63%, mainly due to the following reasons:
Healthcare and medical services: The index rose sharply by 14.14% compared to the same period last year, contributing 0.76 percentage points to the CPI due to adjustments in medical service fees.
Other goods and services: The index increased by 7.01%, contributing 0.25 percentage points to the CPI, with significant price increases in notary fees, insurance, and personal services.
Housing, electricity, water, fuel, and construction materials: The index increased by 4.95%, contributing 0.93 percentage points to the CPI, due to increases in rent, electricity prices, and water charges.
Food and food services: The index increased by 4.42%, contributing 1.48 percentage points to the CPI, with significant price increases in rice, food, and dining out.
Conversely, there were three groups with price reductions in January 2025 compared to the previous year:
Education: The index decreased by 1%, reducing the CPI by 0.06 percentage points due to tuition fee reductions in certain provinces and cities.
Postal and telecommunications: The index decreased by 0.69%, reducing the CPI by 0.02 percentage points due to lower prices for older generation mobile phones.
Transportation: The index decreased by 0.36%, reducing the CPI by 0.03 percentage points, due to a 5.26% decrease in gasoline prices and a 0.48% drop in car prices.
II. Factors Affecting Inflation in 2025
Factors Increasing Inflation
Escalating military conflicts: Tensions in several countries and the intensifying trade competition between major powers, especially the U.S.'s tariff policies, could have long-term inflationary effects. As Vietnam imports many materials for production, higher global commodity prices could increase costs, pressuring domestic prices.
Adjustments in government-controlled services: Price increases in healthcare and education services, driven by the need to account for real costs, will raise the CPI.
Increased demand for electricity: As Vietnam aims for higher economic growth in 2025, electricity demand for production and consumption will likely rise, putting pressure on inflation.
Price fluctuations due to natural disasters and festive seasons: As is typical in the last months of the year and during holidays, prices of food, beverages, apparel, and household goods often rise, and extreme weather or disease outbreaks could exacerbate inflation in some regions.
Stimulus packages: Although policies to lower interest rates and stimulate public investment will support economic growth, they could also increase the money supply, putting upward pressure on prices if not carefully managed.
Factors Containing Inflation
Abundant food supply: Vietnam has sufficient food production to meet domestic consumption and export demand, helping to mitigate inflationary pressures.
Tax reduction policies: Measures like reducing environmental taxes on fuel and lowering VAT for some goods and services will help lower business costs, reducing inflationary pressures.
Macroeconomic stability policies: The government's continued efforts to stabilize the economy and control inflation will help manage expectations, promoting business confidence and curbing inflation.
III. Proposals and Recommendations
To ensure inflation in 2025 meets the National Assembly's target, the General Statistics Office recommends the following measures:
Price management: The price management steering committee should develop and report on proposals for adjusting prices of essential goods (electricity, healthcare, education) with specific rates and timings, ensuring consistency and transparency.
Monitor global price trends: Government agencies should closely monitor global price developments and respond promptly to potential risks to domestic inflation, ensuring stable supply and price control.
Ensure smooth supply chains: Maintain the uninterrupted supply and distribution of essential goods and services, especially for fuel and critical commodities affected by global supply chain disruptions and geopolitical tensions.
Close monitoring of essential goods: Agencies should track price movements for essential goods like rice, fuel, and meat, preparing for potential price hikes during holidays and addressing any market instability or price manipulation.
Coordinated monetary and fiscal policies: The government should continue managing monetary policy prudently, coordinating with fiscal policies to achieve inflation control targets.
Enhance information transparency: The government should improve communication strategies to keep the public informed and reduce inflationary expectations, thereby stabilizing consumer sentiment and market confidence.
Source: General Statistics Office (GSO) of Vietnam
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