|Chart by H.Diu
CPI is gradually decreasing
Average CPI in the first four months of 2023 increased by 3.84% year-on-year; core inflation increased by 4.9%, higher than the average CPI. However, CPI in each month alone wasgradually trending down. For example, the CPI in April fell 0.34% compared with March, while the CPI in the previous months sawan insignificant increase.
According to Ms Nguyen Thu Oanh, Director of the Price Statistics Department (General Statistics Office), CPI tended to decrease because food prices decrease when the supply is abundant; the price of petroleum products and gas felt under world fuel prices; tuition fees in some localities are adjusted. In addition, housing and construction materials prices, culture, entertainment and tourism services and catering services also plummeted.
During the regular Government meeting in April, Prime Minister Pham Minh Chinh requested to effectively harmonize and balance the between interest rates and exchange rates, growth and inflation, supply and demand, monetary and fiscal policy, and internal and external market. According to the Prime Minister, inflation is currently under control within the target set by the National Assembly and is gradually decreasing, therebyprioritizing growth from April, May and the following months.
Many experts also agreethat CPI in Vietnam shows positive signals and may achieve the average CPI growth rate in 2023 of about 4.5%. However, in a written reply to voters on price management,the Ministry of Finance said that there isstill muchpressure on the price level due to complicated and unpredictable fluctuations in the prices of strategic commodities on the world market, especially the prices of energy, food and raw materials for production, along with the implementation of the market price roadmap for some commodities managed by the State.
As the Standing Committee of the Steering Committee for Price Management, the Ministry of Finance has coordinated with relevant ministries and sectors to propose measures to manage and control the prices of essential commodities, thereby stabilizing the price leveland limiting negative impacts on socio-economic development.Price management is implemented carefully, and the prices of the goodsand the government price are kept stable. Domestic petroleum products’ prices are managed according to regulations and the world price. The Price Stabilization Fund is used effectively and flexibly to limit the strong fluctuations of domestic prices with world prices.
Beware of price fluctuations
Recently, the average electricity price has been revised up by 3%. Many opinions are concerned that the increase in electricity prices will increase production costs, reduce domestic products’ competitiveness, and push up CPI. Besides, the increase in the base salary from July 1 will also pressure CPI. Normally, the price level will go up after the base salary grows.
Dr Nguyen Duc Do, Deputy Director, Institute of Economics and Finance, Academy of Finance, said that, in theory, an increase in electricity prices and base salary could affect the prices of many goods on the market and CPI in the remaining months of the year. However, the current consumer demand in the population is not high due to the impact of the economic recession. Therefore, with experience in price management, the CPI is under control and in line with the set roadmap.
In a written response to voters inVinh Long province about the increase in the salary leading to the growth in prices, the Ministry of Finance said that to stabilize market prices from now until the end of the year,especially amid information about increasing basic salary, it is necessary to strengthen solutions to control inflation, stabilize prices and the macroeconomy, strictly control prices and handle violations. This issue needs the coordination of the Market Surveillance Department and local Government in managing commodity prices.
The Ministry said that ministries, sectors and localities should actively prepare plans to control prices of goods priced by the Staten and carefully assess the impact to make adjustments or report to competent authorities to consider and decide on the level of adjustment followingthe price level in the market.
Effectively supervise the price declaration and price listing; and publicize prices. At the same time, inspect the law compliance on price, overcome shortcomings, and handle violations. Furthermore, closely supervise price fluctuations of essential commodities to provide appropriate solutions for management, administration and price stabilization.
According to economic expert Dr Nguyen Bich Lam, to ensure price management, businesses should promoteinitiative and flexibility to update information and accurately forecast market movements, especially the trend, level and price increase roadmap, to take the initiative in adjusting and implementing financial and business plans.
The Ministry of Finance forecasts that the average CPI in 2023 will increase by 3.9-4.8%. The General Statistics Office predicts an average CPI of 3.8-4.8%. The State Bank of Vietnam forecasts average inflation in the year to increase by 4.3% ± 0.5%.