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Not subjective to inflation risk

08:53 | 03/10/2022

VCN - According to Ms. Nguyen Thi Huong, General Director of the General Statistics Office, good control of inflation in eight months helps Vietnam have room to ensure the successful implementation of the target of inflation control in 2022.

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Not subjective to inflation risk
Ms. Nguyen Thi Huong, General Director of the General Statistics Office

There are still many factors that are likely to affect the consumer price index (CPI) and inflation in the remaining months of the year.

Could you tell me which factors helped keep CPI and inflation in the first eight months of 2022 under control at 2.58%?

In the past eight months, the world commodity market continued to have many fluctuations and was influenced by economic and political factors; In which, emerging issues were the prolonged conflict between Russia and Ukraine, China's Covid-19 prevention and control policies, supply chain disruptions and the risk of stagnation inflation holding back growth.

High energy prices caused inflation in many countries around the world, central banks tightened monetary policy and raised interest rates.

Domestically, although under great pressure and surrounded by difficulties of the world, production and business activities continued to have a good recovery trend.

Many synchronous solutions have been implemented by the Government to reduce gasoline prices, stabilize prices of electricity, domestic water, tuition fees, maintain reasonable exchange rates, and interest rates, therefore, inflation of 8 months in 2022 was controlled at 2.58%, and the pressure on input costs was significantly reduced.

Specifically, in the first eight months of the year, gasoline prices were adjusted 22 times (including eight price cuts), making the price of A95 gasoline increase by VND 1,370 per liter; E5 gasoline increased by VND 1,170 per liter and diesel oil increased by VND 6,180 per liter.

Petrol prices have been continuously adjusted downward since July 2022 according to fluctuations of world fuel prices and due to the impact of the State's tax reduction on petrol. From June 21, 2022, the price of A95 III gasoline at VND32,870 per liter, diesel oil at VND30,010 per liter has decreased to VND24,660 per liter and VND23,750 per liter, respectively in August. The falling petrol price is the main factor restraining the CPI growth rate in July and August 2022.

In addition, for goods and services that are priced by the State such as education and medical services, the price of electricity accounting for 12.87% of the total consumption expenditure of the population was controlled by the State in 2022. In which, the Ministry of Education and Training has proposed not to increase tuition fees for the academic year 2022 - 2023 as the previous schedule, even localities have exempted or reduced tuition fees during the last period to share difficulties with people, which helps the average education service price index in the first eight months of the year decrease by 3.14% compared to the same period last year, causing the overall CPI to decrease by 0.17%.

With the price of medical services, by 2021, it was necessary to complete the calculation of salary costs, direct costs, management costs, depreciation of fixed assets and other costs according to the law on prices, but it has been postponed during the pandemic. In addition, EVN's electricity price has not yet increased and EVN has actively proposed not to increase electricity prices this year even though input costs of this industry such as petrol and coal prices have increased significantly.

At the same time, the Government and ministries and branches continuously directed localities to implement price management in the area, many enterprises actively participated in the price stabilization program, ensuring enough essential goods for people's needs, especially food items accounting for about a quarter of the basket of goods.

In the first eight months of the year, inflation has been well controlled, creating a premise for controlling inflation in the whole of 2022. In your opinion, what factors will affect inflation in the remaining months of 2022?

Controlling inflation well in the first eight months of the year helps Vietnam have room to ensure the successful implementation of the 2022 inflation control target of about 4% as set out by the National Assembly. However, there are still potential factors that can increase CPI in the last months of 2022 and 2023.

Specifically, the price of raw materials in the world is at a high level while Vietnam is a country that has to import a lot of raw materials for production, so the import of raw materials with high prices will affect costs and production prices, putting pressure on enterprises' production and thereby pushing up the prices of domestic consumer goods, putting pressure on the economy's inflation.

Besides, the world gasoline price tends to decrease in the short term, but the risk of a rebound is quite high because the conflict between Russia - Ukraine has not ended and when the Chinese economy recovers, it may increase energy demand.

In addition, food prices are likely to increase in the last months of the year, especially when the pandemic has been controlled and people's consumption demand is returning to the time before the pandemic took place.

Although Vietnam is a country with abundant food resources, it will inevitably be affected by world prices when the supply of fertilizer and grain used for animal feed declines sharply.

At the same time, our domestic economy is in a clear recovery phase support packages to boost economic growth are likely to recover even stronger in the last months of the year, consumption of goods will be stronger and service activities will also increase such as tourism, entertainment, dining outside the family, thereby pushing up the prices of goods and services and putting pressure on inflation.

To achieve the inflation target below 4% in 2022 as well as to stabilize the prices of consumer goods, what solutions should we implement, Madam?

Ministries, branches and localities need to prepare sufficient sources of goods to ensure timely response to people's needs for essential food, consumer goods and services.

For pork products, the Ministry of Agriculture and Rural Development should focus on ensuring supply, especially at the end of the year. The Ministry of Industry and Trade and localities must strengthen control of intermediaries and circulation in the market to stabilize the price of this item.

For petroleum products, it is necessary to ensure the domestic supply of petroleum, so that there is no supply disruption. The petrol price stabilization fund should be used rationally with appropriate doses, contributing to controlling inflation, and supporting production and business activities of enterprises and people's lives. At the same time, consider reducing VAT and excise tax on petroleum products in case world prices continue to rise.

For other important input materials such as iron and steel, construction materials, and animal feed, it is necessary to promote the increase of domestic production capacity, giving priority to supplying the domestic market to the export market. At the same time, proactively take measures to stabilize the prices of commodities, preventing unreasonable price increases.

In addition, it is necessary to continue to operate monetary policy proactively, flexibly, and closely coordinate with fiscal policy and other macroeconomic policies in order to control inflation according to the set target, ensure an adequate and timely supply of credit capital for the economy but not be subjective to inflation risks.

To step up the work of information and propaganda, to ensure timely and transparent information on prices and price management by the Government and the Steering Committee for Price Management, especially price movements of important materials and essential items related to production and people's life to limit the increase in inflation expectations, stabilize consumer and business psychology.

By Xuan Thao/ BInh Minh