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It is very difficult to predict prices of some items this year. Photo: Xuan Thao

Advantages to curb inflation at low rate

The consumer price index (CPI) in April 2021 fell by 0.04% from March and rose by 1.27% from December 2020 and rose by 2.7% year-on-year. The average CPI in the first four months of 2021 increased by 0.89% - the lowest rate since 2016, according to the General Department of Taxation.

The Price Management Department of Ministry of Finance this April said that factors that had an impact on CPI in the first months of the year are: prices increased on holidays, Tet; prices of catering services rose because of increases in food prices; the price of education services in the first quarter of 2021 jumped by 4.49% year-on-year due to the impact of tuition fee increases for the new school year 2020-2021.These factors are not expected to put pressure on inflation.

In addition, disadvantages for CPI in the first four months of 2021 year on year are the Government issued support packages for people and producers affected by the pandemic, including a support package for Vietnam Electricity to cut electricity prices for customers in Q2 and Q4 of 2020. As a result, average electricity price for daily life in the first four months of 2021 declined by 5.88% over the same period in 2020.

One of the most worrying factors in the first months of the year is petrol and oil prices. Because the petrol and oil price in the world have been increased, the Ministry of Industry and Trade and Finance have issued flexible administration policies and used the Price Stabilisation Fund at a relatively high level to curb the increase in domestic petrol and oil prices. As a result, the average domestic petrol and oil prices in the first quarter of 2021 fell by 9.54% year-on-year and the oil price fell by 14.5% year-on-year, said Director of the Price Management Department Nguyen Anh Tuan.

Follow market price movements

In a new development, the current pandemic has again hitVietnam. It may have impact on the economic development. Although many experts have drawnpositive scenarios on the basis of wide Covid-19 vaccination widely from the beginning of the year, in the current context, the Covid-19 pandemic is still seen a negative factor for inflation control in 2021.

In 2021, the National Assembly decided to increase the CPI by about 4%. The leader of the Price Management Department said this year the prices of some items are very unpredictable and the big problem is the complex Covid-19 pandemic that will affect price management.

In addition, other factors harm pricing such as the group of fuel and petroleum productswith abnormal increase and decrease and the group of essential commodities, including pork, which will be also a concern if Vietnam cannot control the disease.

Moreover, other factors must be mentioned like natural disasters, storms and floods with complex developments, affecting the supply also affecting the market. The price management of some items continues to follow the roadmap like public services (health, education), which also put pressure on price management in 2021.

According to Assoc. Dr. Ngo Tri Long, in 2021, it is very difficult to predict prices due to the erratic world market, especially with the Covid-19 pandemic negatively affecting the domestic economy and banking system, so credit growth is lower than expected; the economic growth is low (although Vietnam is in the small number of countries with positive growth). Furthermore, inflation is still under pressure from world prices, natural disasters, the pandemic, and bad debts of the banking system which increases from the impact of the pandemic.

Nguyen Anh Tuan said the Price Management Department will continue to advise the Ministry of Finance to perform its role as a standing agency of the Price Management Steering Committee of the Prime Minister; monitor market price movements, especially essential goods and services to promptly introduce solutions to ensure supply – demand balance, especially for goods in which supply is short due to the impacts of natural disasters and the pandemic

The Ministry of Finance proposes ministries and agencies closely follow the market price situation for specific management. For example, for petrol and oil products, the Ministry of Industry and Trade must work closely with the Ministry of Finance to control petrol and oil prices and takes market factors and the Petrol Price Stabilisation Fund in to account.

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"I think the most important thing is to control the market price according to the functions and tasks from the central to local levels. Along with that, the information is also very important to people and businesses to grasp the market situation as well as general policies of the Government and the Prime Minister in managing prices, creating consensus in society, avoiding inflation,"said Nguyen Anh Tuan.