Control inflation expectations through transparent price management: Deputy Prime Minister Le Minh Khai

VCN - Deputy Prime Minister Le Minh Khai, Head of Steering Committee for Price Management, requested units to closely monitor the movements of prices and inflation in the world, thereby promptly warning about risks causing domestic inflation.
Control inflation from flexibility of policy Control inflation from flexibility of policy
Many factors help to control inflation Many factors help to control inflation
Control inflation expectations through transparent price management: Deputy Prime Minister Le Minh Khai
Deputy Prime Minister Le Minh Khai, Head of the Price Management Steering Committee chairs the meeting of the Committee. Photo: VGP

Space for inflation control gradually increases

At the meeting of the Price Management Steering Committee on the results of price management in the first seven months and the remaining months of 2023 held on August 3, Deputy Minister of Finance Nguyen Duc Chi said, in the first months of the year, the market of essential commodities did not see abnormal fluctuations; the supply was maintained and the prices of basic commodities were stable and developed in accordance with the price management scenario of the Price Management Steering Committee.

The Ministry of Finance has proposed two inflation scenarios for the third quarter and the remaining months of 2023.

In scenario 1, the prices of items and services are assumed in the last 5 months of 2023 compared to the same period last year such as Food and food prices up 3%; rental housing prices up 8%, housing maintenance materials prices increased up 3%, medical service prices up 4%; petroleum product price down 10%, gas price down 10%. The average CPI in 2023 is forecast to increase by 3.2% compared to 2022.

In scenario 2, if the petroleum product prices decrease lower (5%), food and food prices increase higher (5%), medical service prices grow 6%, the average CPI in 2023 is forecast to rise about 3.7% compared to 2022.

However, according to the Deputy Minister, the price management is still affected by many factors such as the pressure of public debt, bad debt of enterprises, high risks in the financial, monetary and real estate markets, and the risk of the US banking system when one more small bank is under special control. Moreover, some new risks and challenges on global food security, natural disasters, etc. also have impacts on the price level and consumer price index (CPI) in the country.

According to estimates of the Ministry of Finance, if assuming that CPI in the remaining months rises at the same rate compared to the previous month, in the remaining 5 months, CPI has room to increase by 1.61% per month to meet the target of average inflation control of about 4.5% in 2023.

Also at the meeting, leaders of ministries and sectors said that inflation for the whole year 2023 will be lower than the target. They agreed that in the first months of the year, the supply of essential goods is ensured and the prices are stable, so the space for price management is easier from now to the end of the year. Therefore, it is eligible to consider the roadmap to adjust state-managed goods and services under the market roadmap at an appropriate time, ensuring social consensus, reducing pressure in the following years.

However, the Deputy Minister of Finance said that the space to control inflation is gradually increasing, but the fact that core inflation is at a much higher level than general inflation, showing the risks of long-term high inflation and extending into the following years.

According to Deputy Minister of Industry and Trade Do Thang Hai, on August 25, Nghi Son Refinery and Petrochemical Complex (accounting for 35-40% of petroleum supply) closed for 55-day maintenance, which is a big challenge in managing petroleum product prices. In addition, a representative of the Ministry of Agriculture and Rural Development said that rice prices tend to go up in the near future due to increased export demand; Pork prices tend to increase again since June and some other food items may rise under the seasonal rule at the end of the year.

Stabilize sentiment and control inflation expectations

Speaking at the meeting, Deputy Prime Minister Le Minh Khai highly appreciated the achievement as well as great efforts of ministries, sectors and localities in implementing price control measures over the past time.

Control inflation expectations through transparent price management: Deputy Prime Minister Le Minh Khai
The Deputy Prime Minister requests to promptly warn about the risks of causing inflation in the country. Photo: VGP

In the remaining months of 2023, Deputy Prime Minister Le Minh Khai suggested that ministries, sectors and localities continue to promote the achieved results, grasp the proposed scenarios, and strictly follow the instructions of the Government and the Prime Minister, monitor closely the movements of prices and inflation in the world, promptly warn about the risks of causing domestic inflation; effectively and flexibly perform the role of regulating and stabilizing the prices of State-managed goods.

For the prices of items on the list of goods controlled price by the State, the Deputy Prime Minister requested to closely monitor and coordinate with ministries and sectors to review input parameters, assess the situation, impact, and appropriate adjustment to update the inflation scenario as the basis for price management to ensure inflation control for the whole year.

Deputy Prime Minister Le Minh Khai also emphasized the implementation of proactive and flexible monetary policy, and fiscal policy and other macroeconomic policies to control inflation under the set target. At the same time, it is necessary to promote information and communication on prices and price management, especially price movements of important materials, essential products related to production and people's life to stabilize consumer sentiment and control inflation expectations.

The Deputy Prime Minister Le Minh Khai also raised specific opinions related to price management for essential commodities such as petroleum product, electricity, agricultural products, educational services and supplies, medical services, construction materials and transportation services...

The Deputy Prime Minister asked the ministries, sectors and localities to monitor the supply and demand movements and prices of commodities under their management to take appropriate management measures, effectively meeting domestic demand and inflation management goals. Deputy Prime Minister Le Minh Khai assigned the Ministry of Finance to strictly implement the Law on Price No. 16/2023/QH15, which will take effect from July 1, 2024.

By Hoai Anh/Ngoc Loan

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