Despite an abundant supply of goods for Tet, the lunar new year festival, which falls on February 3 this year, consumer prices continue to rise, putting more pressure on the government's anti-inflation efforts.
Nguyen Tien Thoa, head of the Price Management Department under the Ministry of Finance, said vendors have stocked up enough essential consumer products to meet increasing demand during Tet, the biggest festival of the year.
Vu Vinh Phu, chairman of the Hanoi Association of Supermarkets, said the city's purchasing power this Tet is expected to increase 15 percent to VND20 trillion (US$950 million). Demand for most essential foods is expected to rise accordingly.
"Goods are abundant in both variety and price ranges, so a scarcity of goods followed by sharp price increases will not happen," he said. "Retailers and manufacturers have actively prepared enough goods for the Tet season."
Duong Thi Quynh Trang, Manager of External Affairs at BigC Vietnam, said the supermarket is expected to raise the amount of goods in stock by 30 percent compared to the previous Tet. It has stocked up 130 tons of traditional jams and candies, and some 500 tons of vegetables.
Tran Trung Hung, head of the marketing bureau of the confectionery producer Hai Ha Kotobuki, said his company has planned to turn out some 2,000 tons of products to meet demand this Tet, up 30 percent from last year.
"The consumption increase is partly due to the government policy encouraging Vietnamese people to use Vietnamese products," he said. For this Tet, his firm is introducing ten new, high-quality products onto the market. They are releasing the products in premium packaging so that they could be given as gifts during the festival.
Despite abundant supply, there are only a few varieties of goods with consistently high quality, said Phu of the Hanoi Association of Supermarkets.
Hanoi has 70 supermarkets, which account for only 17 percent of the city's market share. People often shop at traditional markets, where quality is not closely monitored, he said.
Locally-made products, especially confectioneries, have so far held the upper hand in the Tet market. Phu said 80 percent of the products in supermarkets in Hanoi are locally-produced.
Competitive prices have created advantages for local items, he said. Due to the increase in value of the US dollar over the dong, imported cookies will see a price hike of 20-25 percent over last year, while the price of a locally-made product may only increase by 10-15 percent.
At a Hanoi Trading Corp. (Hapro) shop, locally-made goods accounted for most of the essential items for Tet, such as confectioneries, coffee, tobacco and beverages.
Trang of BigC said local producers such as Kinh Do, Bibica and Hai Ha were the main suppliers of confectionery products for her supermarkets this Tet. "Domestically-produced confectioneries account for 90 percent of our sales. Imported products, mainly from Malaysia, Singapore and Thailand, make up only 10 percent."
Lower consumption growth
Phu said prices will not increase much during Tet. However, as prices are already comparatively high, purchasing power this Tet may not increase as much as last year.
"Purchasing power this Tet is expected to increase by 15 percent, which is quite a bit lower than the 20 percent last Tet. High prices will make people rein in their spending," he said.
Vietnam's inflation rate escalated to its highest in 22 months, as prices increased 11.75 percent last December from a year earlier, according to the General Statistics Office.
Vegetables, meats, and some other foods could see price increases during Tet because their production is so dependent on the weather, Phu said.
Most items have seen Tet price hikes, a traditional market trend around this time of year, mainly due to higher input costs. Hung of Hai Ha Kotobuki said prices of his firm's products will rise by 5-10 percent as costs of some materials such as sugar and butter increased by 30-50 percent. "We have to reduce profits to keep our customers in the current economy."
To stabilize prices, Hanoi and Ho Chi Minh City have so far spent VND400 billion (US$19 million) and VND380 billion ($18.1 million) respectively. The money is mostly given as interest free loans to 28 participating businesses so they can stock and sell rice, meat, seafood, eggs, cooking oil, sugar and vegetables at lower than market prices.
However, price subsidized goods under the price stabilization program are expected to meet just 10-30 percent of the local demand, so they cannot keep consumer prices stable, said experts.