Vietnam’s consumer price index (CPI) in July declined for the second consecutive month, falling by 0.29 percent, recording the lowest level in the month since 2004, General Statics Office (GSO) reported on July 24.

With this, the nation’s CPI in the first seven months of this year increased only 2.22 percent against December 2011 and 11.2 percent compared to the same period last year’s average data.

Nguyen Duc Thang, head of the GSO’s Pricing Department, said that the July’s situation was due to the sharp decline in prices of three key commodity groups, including food-restaurant services, housing, water, electricity, fuels and building materials and transportation.

Hanoi and Ho Chi Minh City , the two largest cities accounting for 30 percent of the nation’s CPI, also saw a dramatic fall of 0.29 percent and 0.57 percent, respectively, which is also one of the reasons behind the decline.

July CPI clearly showed that people are tightening their purse strings in the context of a gloomy economy, while low credit growth, high inventory level and increasing number of bankrupt enterprises also contributed to the drop in July CPI, Thang said.

The recent increase in electricity and fuel prices has not had clear impact on July CPI, while the previous decrease in fuel prices has led to significant decline in transport price.

Of the four groups that saw fall in prices, transport recorded the highest decrease and post and telecoms scored the lowest. Prices of medicine and healthcare services saw the largest increase of 3.36 percent.

Thanks to the abundant supply, food and foodstuffs prices dropped by a dramatic 1.49 percent against last month.

Thang predicted that CPI in August will increase due to the simultaneous rise in prices of healthcare services, fuel, electricity and other services.

Meanwhile, Dr. Le Dinh An, former Director of the National Centre for Socio-economic Information and Forecast under the Ministry of Planning and Investment, forecast that August CPI may continue to fall if the disbursement of public investment is not improved and economic obstacles, such as low credit growth, and high level of bankruptcy and inventory, are not removed.

Accordingly, 2012 inflation may be around 5.5 percent and GDP growth may reach 5 percent, An predicted.-VNA