Please tell me about the changes in CPI calculation if GSO’s proposal is approved by the Prime Minister?

Currently, CPI is calculated every month and made public with four comparisons: the comparison with the previous month of the same year, with the same month of the previous year, with the original year (2005), and with December of the previous year.

Besides the monthly CPI, GSO also calculates quarterly and yearly CPI, while comparing with the same period of the previous year in order to provide the figures to several special subjects.

However, there exists a problem that the comparisons prove to not come in line with the international practice. Now in the world, the yearly CPI to be announced is the CPI in comparison with the previous year, and that is the reason why GSO has proposed to make another comparison of the CPI.

Do you mean that the main change in CPI calculation and announcement is to choose which comparison to make?

The announcement of CPI in the currently applied way with the comparisons with the previous months and the same months of the previous years will remain, which will serve the Government’s work of regulating the national economy and the demand for economic analysis.

Currently, Government agencies and most people lean towards to using the CPI of December of the report’s year and comparing with December of the previous year. However, as I said before, in order to become closer to the international practice, we have suggested to use the yearly CPI of the report year and compare it with the previous year.

Do you mean that there would not be changes in the method of calculating CPI?

As I said above, there would be no change in the method of CPI calculation. The method GSO is following is the one introduced in the latest document provided by the International Labour Organisation ILO, which proves to be suitable to Vietnam’s conditions.

For the last many years, the International Monetary Fund (IMF) has been sending experts to Vietnam to check the CPI method being applied by GSO. IMF said that the method of calculation and representative commodities prove to come in line with international practice.

The CPI provided by GSO has been referred to by Communist Party’s organs, Government and research institutes, and the index proves to reflect accurately the consumer price movement in Vietnam.

In principle, it is necessary to check the basket of commodities for calculating CPI every four or five years, and the latest check was conducted in May 2006, which has been used for calculating CPI for 2006-2010.

Source: VIR.