Vietnam inflation could ease in coming months: official

TN News

Email Print

While inflation in April was higher than expected, price stabilization measures have been implemented well and will show their impact soon, a finance ministry official said.

Nguyen Thi Thuy Nga, deputy director of the Price Management Department under the Ministry of Finance, tells Thanh Nien Weekly that consumers have to play a proactive role as well.

Thanh Nien Weekly: It has been a trend in recent years that the rise in consumer price index (CPI) eases off in April or May. Why has this year been different?

Nguyen Thi Thuy Nga: The CPI increased 3.32 percent in April over the previous month, which is much higher than the corresponding increases in recent years. Our study and analysis shows that this was because of hikes in prices of food and transport services, which rose 5.61 percent and 6.04 percent respectively.

The general trend of a slowdown in price hikes every April or May is because consumption would return to normal in the aftermath of Tet (Lunar New Year festival), which is usually celebrated in late January or February.

This year, it has been the other way round with April actually witnessing a sharp increase in prices.

I think there are many reasons for this. One of them is an increase in world prices. World food and grain prices increased sharply in the first months of this year. Many other countries have also been affected by the increase and are facing pressures of high inflation. Vietnam, a significantly open economy, has obviously been affected.

However, there are also domestic reasons. For example, the price increase that happens during the distribution process. There was a situation that producers of some goods like steel, fertilizers and dairy products did not increase their prices, but these went up during distribution.

I think the domestic market is guaranteed a good supply. So we have to focus more on market management. To implement well the price stabilization program, firms in Hanoi and Ho Chi Minh City should build a closed chain from production to distribution, which will help minimize unreasonable expenses during the latter stage.

The price hikes as mentioned in government figures are much lower than what consumers are actually experiencing. In fact, consumers have seen food price increases of up to 150 percent in the market, not the 5-6 percent compiled by government agencies. How do you explain this?

The basket of goods used to calculate the CPI has many products. The increase is as high as you say if we consider the prices of some specific products, for instance, pork or beef. There are some products in the basket that have seen prices soar, and others that have registered no increase.

It has been a year since the Ministry of Finance issued Circular No. 122 on price management. Has this been effective?

Localities have implemented the circular well. It has helped control the hikes in prices of some goods, and state subsidies have been used in some cases to stabilize them.

There have also been some procedural shortcomings in implementing the circular. For example, some milk producers have offered one selling price nationwide, but the circular asks them to register their selling prices in all localities. Thus there are some irregularities that need to be addressed.

What else has been done to reduce the increase in prices?

The government's Resolution 11 has come up with general measures to boost production and provided specific directions for monetary and fiscal policies. Localities and sectors are required to strictly implement these. We have also instructed them to practice thrift in public investment and regular spending, and strengthen monitoring of price stabilization measures.

How are these measures better than those we implemented in 2008?

Each measure applies to a specific period and circumstance, and it is impossible to say which is better. However, I can say that public opinion has been in favor of Resolution 11. People agree that it is a timely, strong measure.

You say that all measures have been implemented well, but prices are still rising. So what are the gaps in price management?

That is a difficult question. The state manages prices of goods under a market mechanism, and does not fix prices by itself. The state only fixes prices of some monopoly products that affect the nation's well-being and people's livelihoods.

For other products, prices are determined by market forces, and the state takes measures to indirectly influence them by means of monetary or fiscal policies, or trying to balance supply and demand.

What do you think the price trend will be in the coming months?

We think the price increase will be slower in the coming months, as the prices of some products like food, gas, cement and steel have shown signs of stabilization since early April. Thus, the prices of consumer goods could go down, but we cannot say by how much.

Will real consumer prices always be higher than targeted?

In fact, it is difficult to comment on this. People should get themselves acquainted with market changes. They should contribute to the efforts to reduce inflation, not just rely on the state. Consumers should be wise, and not insist on buying goods at unreasonably high prices, for example milk. Why do we insist on buying very expensive milk while we have alternatives?

If consumers are wise, the market will adjust by itself. If consumers insist on using a kind of milk product despite its high price, the producer will make no adjustments. So, we have to change our consumption habits.

More Society News