HSBC has lowered its 2022 inflation rate forecast to 3.5 per cent from 3.7 per cent in its most recent report and said it is due to stable domestic food prices, which are likely to help curb headline inflation.

In the report, HSBC experts also analyze energy price inflation in Vietnam, which has already lasted for some time. Transport prices have hit a record high, surpassing food inflation to become the main driver of Vietnam’s headline inflation.

In addition to the rising world oil price, a shortage of domestic gasoline supply makes Vietnam’s energy scarcity even more serious. Despite rising energy prices, moderate food inflation, which accounts for a larger share of the CPI basket, has helped control the overall increase in headline inflation so far.

After considering both inflation and growth, HSBC also revised its forecast for Vietnam’s operating interest rates in 2022, from 3.7 per cent in the previous report to 3.5 per cent in this report.

“While inflation remains below the 4 per cent target for the moment, we expect that persistent high energy prices will continue to push prices up overall,” the report noted. HSBC also predicted that inflation will at times surpass the ceiling of 4 per cent set by the State Bank of Vietnam during the second half of this year, but only temporarily. Such a situation is likely to cause the central bank to adjust interest rates by 50 basis points in the third quarter of 2022 before raising rates three times, by 25 basis points a time, in 2023.

HSBC also offers predictions on inflation in ASEAN countries. Inflation has become more pressing in Singapore, Thailand, and the Philippines, while being under sound control in Vietnam, Malaysia, and Indonesia.