According to data from the General Statistics Office, Vietnam’s inflation rate in July was 3.14%. This is the lowest number in Southeast Asia and ranks 10th in Asia. Meanwhile, the US inflation index is 8.5%. So, why is inflation higher in the US than in Vietnam?
Inflation in July of Vietnam
On July 29, according to data from the General Statistics Office (here), CPI in July 2022 increased by 0.4% (in urban areas by 0.42%; in rural areas by 0.37%). Among 11 main groups of consumer goods and services, 10 groups of goods increased in price compared to June; In the transportation group, the price decreased by 2.85% due to the decrease in the domestic gasoline price. Compared to the same period in 2021, the CPI in July increased by 3.14%.
Core inflation in July was 0.58% compared to June and increased by 2.63% over the same period in 2021. On average, in the first 7 months of 2022, core inflation increased by 1.44% over the same period in 2021, lower than the CPI level. overall average (up 2.54%). This reflects fluctuations in consumer prices mainly driven by food and petrol prices.
Why is inflation higher in the US than in Vietnam?
Why is the inflation rate in the US at 8.5% while in Vietnam it is only 3.14%?
According to information from the General Statistics Office, the way to calculate inflation index in each country is the same. However, the difference here is that the % of commodity groups calculated in each country is different.
Specifically, in Vietnam, food and catering services account for more than 33%. In the first 6 months of 2022, the average monthly income of salaried employees is VND 7.4 million. Therefore, Vietnamese people have spent 2.4 million VND on daily food needs. This is not considered a large amount of money that workers can have enough to regularly eat at restaurants.
While in the US, food and catering services account for only 14.2% with the average income of workers falling at about $6,000. Accordingly, Americans spend $ 900 per month on food needs. In the US, this is considered a fairly large amount of money, enough for people to spend without worry
Explains why the US CPI has increased sharply in recent years. CPI in the US depends a lot on transportation and transportation (18%). When the price of gasoline increases, it will lead to an increase in transportation, and an increase in commodity materials. Accordingly, housing prices (42.3%) will also increase.
Two items (home and shipping) account for 60% of the US CPI. While in Vietnam, two similar items account for only 30%. Therefore, when the price of gasoline increases, the US will be the country that will be heavily affected.