2019: Target of inflation control will be realized

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Closely monitoring price changes of essential goods to propose timely solution to realize the target of inflation control. Photo: Nguyen Hien

3 price scenarios

The 6th session of the XIV National Assembly adopted a Resolution on the socio-economic development plan for 2019, which set out the GDP growth target at 6.6-6.8% and  Consumer price growth rate (CPI) at about 4%.

According to economic expert Ngo Tri Long, in 2019, the maket price of Vietnamese goods will be affected by many factors. In particular, it is worth noting that epidemics for livestock are always a risk for affecting the supply and prices of food products. In addition, the weather and climate are always factors that can greatly affect agricultural production and agricultural product supply in the market.

"It is forecasted that some factors will put pressure on the price level in 2019 such as: From January 1, 2019, the regional minimum wage from VND 2,920,000 to VND 4,180,000 / month for workers will be applied, prices of some goods managed by the State will be adjusted according to the roadmap, electricity prices will be adjusted, prices of petroleum and other basic commodities in the world market will have complicated changes Therefore, the trend of USD price increase will also affect the domestic exchange rate," said expert Ngo Tri Long.

Discussing this, according to Dr. Nguyen Duc Do, Deputy Director of the Institute of Economics and Finance under Academy of Finance, the sharp decline of oil prices and the inflation rate of 2.98% in December 2018 compared to the same period last year (a sharp decrease from 3.89% in October 2018) are  favorable conditions for maintaining low inflation in the first month of 2019 and controlling the inflation rate at below 4% in 2019. Low inflation rate in the first month of 2019 will have a positive impact on the inflation rate in the same period of all months of the year, as well as the  average inflation rate of 2019.

Mr. Nguyen Duc Do also set 3 scenarios on inflation rate in 2019. In the low scenario, oil prices continue to fall and the VND / USD exchange rate only increases by 1%, the inflation in the same period of 12/2019 may be at 1% and the average inflation rate in 2019 is only 2.5%. With the medium scenario, the inflation will increase by 0.14% per month (excluding adjustment of electricity price, health service and education prices), equivalent to the basic inflation increase of 2018. With this increase, the average inflation will be only 2%. However, due to the adjustment of prices according to the roadmap, the average inflation will be higher, and may be about 3%. As for the high scenario, if the price of petroleum increases sharply again, and the exchange rate increases as much as in 2018, but at the same time the Government continues adjusting service prices according to the roadmap, the average inflation in 2019 will still be lower than 3.54% of 2018.

"Overall, it can be said that controlling the inflation target below 4% in 2019  will almost certainly be realized," said Dr. Nguyen Duc Do.

Synchronously carrying out solutions

According to Ngo Tri Long, although the target of inflation control below 4% in 2018 was successful at 3.54%, the 2019 CPI will be under pressures if the Government, ministries, sectors and localities do not actively control and closely coordinate with each other in operating prices of commodities.

He also put forward the question that since the 2018 economy was really prosperous, whether the momentum in 2019 would continue or not? There are a lot of difficulties and challenges for the economy, if there are not timely solutions to overcome them, these difficulties will put pressure on the economy in 2019.

"The task will be extremely heavy, because the target of controlling inflation in the range of 6.6-6.8% for GDP growth in 2019 is not easy, especially in the context that the world economy might encounter many uncertainties, the domestic economy is still difficult and many motivating factors for growth are critical," said Ngo Tri Long.

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In order to achieve the target of increasing the average consumer price by 4% this year set by the National Assembly, according to the Price Management Department, Ministry of Finance, in 2019, the Ministry of Finance will continue to closely coordinate with the ministries, sectors and localities to strictly implement  directions of the Government, the Prime Minister and the Head of the Price Steering Committee with specific solutions such as: Continuing to closely monitor market price changes of essential goods and proposing timely solutions; strictly controlling price constituents for some commodities; strengthening the inspection of the observance of price laws, especially for essential goods; reviewing and improving the legal system on prices, speeding up the completion of economic and technical levels as a basis for determining service prices according to the roadmap for accurately calculating service costs to prices.