CPI and core inflation under control

Following the Lunar New Year, or Tet, holiday, rising prices for various goods pushed up February’s CPI amid ongoing efforts to balance inflation control with the push for higher economic growth.

The latest report from the General Statistics Office (GSO) shows that the CPI increase was primarily driven by supply shortages leading to higher pork prices, as well as rising costs for dining out, rental housing, and transportation services due to stronger consumer demand. As a result, the CPI rose 0.34 per cent against January and 2.91 per cent against February 2024. The CPI also rose in the first two months of 2025, by 3.27 per cent year-on-year.

Rising costs in key sectors

The CPI’s 0.34 per cent month-on-month increase in February included higher prices across nine groups of goods and services, while two groups posted price declines.

The transportation sector experienced the highest increase, of 0.63 per cent, contributing 0.06 percentage points to overall CPI growth. This was largely driven by heightened travel demand during the Lunar New Year holiday. Fuel prices, meanwhile, climbed 0.61 per cent due to domestic price adjustments.

Housing, electricity, water, fuel, and construction materials saw a 0.55 per cent rise, contributing 0.1 percentage points to the overall increase. Rental prices grew 0.8 per cent, as a large number of workers returned to cities for employment after the Lunar New Year and students resumed their studies, driving up demand for rental housing.

Additionally, high real estate prices prompted many landlords to raise rents to reflect property values. Maintenance material costs increased 0.09 per cent, driven by higher cement and steel prices, which followed rising input costs such as coal, steel billets, electricity, and labor. Household electricity prices rose by 0.38 per cent, while water prices went up 0.26 per cent due to increased consumption. Meanwhile, gas prices climbed by 0.56 per cent after a domestic price adjustment on February 1.

Food and dining services rose 0.43 per cent, contributing 0.14 percentage points to overall CPI growth. Meanwhile, the healthcare and medical services group increased 0.31 per cent, with medical service prices rising 0.36 per cent. Additionally, the humid weather in northern Vietnam led to a surge in respiratory illnesses and flu cases, driving up demand for pain and fever relievers, respiratory medications, vitamins, and supplements.

Other groups also posted price increases, including miscellaneous goods and services, up 0.18 per cent, culture, entertainment, and tourism, up 0.17 per cent, beverages and tobacco, up 0.12 per cent, household appliances and equipment, up 0.05 per cent, and education, which saw a slight rise of 0.02 per cent.

Measures for stability

According to the GSO, core inflation in February rose 0.3 per cent against January and 2.87 per cent year-on-year. The first two months of 2025 saw core inflation increase 2.97 per cent compared to the same period last year; lower than the overall CPI of 3.27 per cent. This discrepancy is primarily due to the exclusion of key price-driving factors such as food, electricity, and healthcare services from core inflation calculations.

To maintain the 2025 inflation target of under 4.5 per cent, set by the National Assembly, Deputy Prime Minister Ho Duc Phoc, Head of the Price Steering Committee, emphasized proactive market monitoring. During a meeting in February, he called for closer observation of domestic and global supply and demand trends, particularly for strategic and essential goods, to develop flexible response strategies. A key priority is ensuring supply chain stability, especially for fuel and electricity, to prevent disruptions.

For goods managed by the State, relevant ministries have been instructed to implement price adjustments in a market-driven manner while maintaining strict oversight. Additionally, efforts will continue to strengthen production, distribution, and consumption links to create a seamless supply chain. Coordinated monetary and fiscal policies will be pursued to sustain economic growth, alongside intensified market inspections to prevent shortages and price surges.

Domestic market remains a key growth driver

According to the GSO, the total retail sales of goods and consumer service revenue in February are estimated to have increased by 9.4 per cent year-on-year and 9.4 per cent in the first two months. This is a positive sign, reflecting the continued strong recovery of domestic consumption.

The Ministry of Industry and Trade (MoIT) has assessed that these figures indicate stable growth momentum in the domestic market, which plays a crucial role in supporting the economy amid global market fluctuations. The government has set a target of 12 per cent growth in retail sales and consumer revenue for 2025. With a 9.4 per cent increase in the first two months, average monthly growth of at least 12.2 per cent will be required for the remainder of the year to meet this goal.

Several factors support the target: the stable growth trends in the retail market over recent years, the expanding market scale and purchasing power, and the government’s strong leadership and proactive coordination between ministries and local authorities to boost consumption. Various demand stimulus programs and e-commerce development initiatives have diversified distribution channels and improved customer accessibility. Moreover, a stable macro-economic environment and reasonable interest rates provide favorable conditions for consumption and investment.

However, challenges remain. Uncertainties in global trade policies could impact supply chains and commodity prices. Ensuring a stable supply of goods is crucial, especially amid potential fluctuations in transportation costs and raw material prices. Additionally, rising consumer expectations for product and service quality require businesses to continuously innovate and enhance competitiveness.

Nevertheless, with the positive growth trends seen from the start of the year, the government’s flexible policy measures, and businesses’ adaptability to market dynamics, the 12 per cent growth target for 2025 is entirely feasible.

To support this goal, MoIT will continue coordinating with ministries, localities, and the business community to implement comprehensive measures that stimulate consumption and support production. Key initiatives include boosting demand through promotional campaigns, enhancing the “Vietnamese people prioritize Vietnamese goods” program, and ensuring stable supply chains, particularly for essential goods. Strengthening supply-demand connectivity and market stability will also be prioritized.

Furthermore, the Ministry will work with local authorities to develop supply-demand balancing strategies, particularly during peak periods, to prevent shortages and price surges. It will also coordinate with other ministries on price management, particularly for essential goods such as fuel, food, and construction materials, to maintain macro-economic stability.