Vietnam's headline consumer price index (CPI) surged to 4.65% year-on-year in March 2026, a significant increase from the average of 2.94% recorded in January and February, according to UOB Global Economics & Markets Research [1]. This jump was primarily attributed to higher energy costs, resulting in inflation exceeding the State Bank of Vietnam’s (SBV) target of 4.5% [1]. UOB notes that the inflation shock is supply-driven, rather than demand-driven, which influences the central bank's policy response [1].
Despite inflation rising above the SBV's target and expectations that it will continue to climb in the coming months, UOB projects that the SBV will not tighten monetary policy. Instead, the SBV is expected to maintain its refinance rate at 4.5% throughout 2026 [1]. UOB emphasizes that policy tightening is not appropriate in this context, given the supply-driven nature of the price increases [1].
The focus now shifts to the SBV’s policy stance as inflation remains elevated. UOB's analysis suggests that the central bank will prioritize stability and refrain from raising rates, even as inflation persists above target levels [1].
CONCLUSION
Vietnam's inflation has surpassed the SBV's target, driven by higher energy costs, but UOB expects the central bank to keep its policy rate unchanged. The supply-driven nature of the inflation means no immediate tightening is anticipated, with the SBV likely maintaining its refinance rate at 4.5% through 2026. Market participants should monitor inflation trends and SBV's policy signals for further developments.