21.06.2020, 20:51

Inflation in 2019 under the Government’s control

VCN – The Consumer Price Index (CPI) in the first six months moved  at low level and was expected to be around 3.3-3.9 percent percent on average. That is a comment at the Conference on price and market developments in Vietnam in the first six months and forecast for 2019 held on July 4.

The conference. Photo: Thuy Linh

The movement of CPI in the six months was in the low scenario

As reported by the Department of Price Management under the Ministry of Finance, the market price level in the first half of 2019 was high in the month of the Lunar New Year, slightly decreased in March, gradually increased again in the two following months and fell again in June.

According to the General Statistics Office, the average CPI in the first six months of 2019 compared to the same period in 2018 saw an increase of 2.64 percent. Thus, CPI in the first six months was relatively close to the forecast and in the low CPI scenario.

According to Nguyen Ngoc Tuyen, Academy of Finance, food; housing and construction materials; traffic were the groups of products and services with the largest changes on price, raising the CPI in the first six months of 2019.

"In the first six months, in addition to major fluctuations on price of food during the Lunar New Year and impact of African swine fever, prices of electricity and petroleum had a significant impact on CPI. World petroleum prices fluctuated complicatedly and the State had to adjust the prices many times. Electricity price increased by 8.6 percent in May, leading to a sharp increase of 1.28 percent in housing and construction materials prices compared to April and an increase 2.7  percent in price of product and service groups in the six months. This contributed to increasing average CPI in the last six months,” Tuyen said.

According to Nguyen Duc Do, Deputy Director of the Institute of Economics - Finance, average inflation in the first six months was at a low rate despite the sharp increase of electricity and petroleum prices in March and April. Even the inflation compared to the same period last year of June also decreased to 2.61 percent.

Do said that there were many reasons for low inflation. Firstly, core inflation though tended to increase slightly was still lower than 2 percent. This is the main trend in recent years. Secondly, the petroleum price after the increase at the beginning of the year decreased in May and June. Thirdly, the exchange rate was stable by the State Bank, only increasing by 1 percent in the first six months of 2019.

At the conference, many experts said that in the first six months of 2019, Vietnam’s economy faced many big challenges from the world economy and domestic difficulties. However, the Government's determination in implementing macroeconomic stability, controlling inflation, the active control of prices of essential goods, and supply meeting the demand were factors contributing to the low CPI.

Average CPI in 2019 will be in the range of 3.3-3.9 percent.

According to the Department of Price Management, the price management and inflation control in the remaining months of 2019 are set in the context that the world economy is tending to slow down and the tension in the world political situation has not shown any signs of cooling down, making fuel prices such as petroleum fluctuate complicatedly and unpredictably

“The CPI in the first six months of the year moved in the scenario and at low rate, with forecasts of factors affecting CPI in the second half of the year, the average annual CPI in 2019 will be in the range of 3.3-3.9 percent. Thus, the inflation in 2019 is still basically under the Government’s control if there are not unusual happenings from the world’s economy - politics and markets." the Department of Price Management said.

Expert Ngo Tri Long also said that in the future, factors that may affect the CPI are domestic food prices. Moreover, in July, the State will implement a wage increase (6.92 percent) for the pension, social insurance and monthly allowance for eight cases. In September, the time of the new school year, there will be factors affecting the CPI.

Notably, world petroleum prices in the future are forecasted to move and increase slightly. However, Ngo Tri Long also said that the consecutive decline in petroleum prices has contributed to stabilising market prices and reducing inflation, so in the rest months, the petroleum prices will no longer be a threat to the CPI.

To ensure the goal of controlling the average CPI in 2019 and  support macroeconomic growth and stability, from now to the end of the year, the Ministry of Finance will continue to actively work with other ministries and localities to carry out the directions of the Government, the Prime Minister and Deputy Prime Minister Vuong Dinh Hue - Head of the Steering Committee for Price Management.

Long also proposed, the Government persistently deploy large groups of solutions to stabilise macroeconomic, control inflation and growth. In which, monetary and fiscal policies continue to be flexible and proactive to control inflation. In addition, it is also necessary to speed up the disbursement of public investment capital and promptly solve problems in projects.

“In order to keep the average CPI in 2019 below 4 percent, ministries should continue to review to accelerate the reduction of prices of goods of which price may decrease. Goods of which prices tend to increase in the future such as food, pork needs reviewing and balancing supply and demand, price stabilization fund must be used appropriately to stabilise the market," Long said.

Inflation in 2019 under the Government’s control
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In particular, for petroleum prices, he said that the Ministry of Industry and Trade must assume the prime responsibility and work with the Ministry of Finance to manage price and appropriately use the stabilisation fund, take initiative to introduce scenarios to respond  high increase in prices and to create favourable conditions for controlling the price level.

 

 

 

 

 


By Thuy Linh/ Huyen Trang