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Pressure to control inflation

19:22 | 20/06/2022

VCN - Inflationary pressure is weighing heavily not only on the administration and economic development of the country, but also on the pockets of the people.

Deputy Prime Minister Le Minh Khai: flexibly manage monetary policy and control inflation Deputy Prime Minister Le Minh Khai: flexibly manage monetary policy and control inflation
Prevent unreasonable price increases Prevent unreasonable price increases
Monitor supply and demand, stabilize market prices, control inflation Monitor supply and demand, stabilize market prices, control inflation
The rising prices of many goods are weighing heavily on people's pockets. Photo: T.D
The rising prices of many goods are weighing heavily on people's pockets. Photo: T.D

Price increases

According to the General Statistics Office, the Consumer Price Index (CPI) in May 2022 increased by 0.38% over the previous month, by 2.48% compared to December 2021 and by 2.86% over the same period last year. Among 11 main groups of consumer goods and services, 10 increased in price compared to the previous month, with only 1 decreasing.

Domestic gasoline price increases according to the world price; the increase in the price of food, foodstuffs, the price of essential consumer goods and services in line with the price of input materials are the main reasons for the increase in the CPI. As observed by a reporter from Customs Magazine, the price level of basic commodities such as food and services is increasing sharply.

At a restaurant in Hoang Mai district (Hanoi), from the middle of May, there was a sign to increase the price of about 20% per dish. According to Mr. Vu Viet (restaurant owner), although he knows that the price increase will risk losing a number of customers, as the price of ingredients has increased, if not he does not increase his prices he will not be able to turn a profit.

As for consumers, the fact that most items are increasing in price is becoming an obsession.

Thuy Ngoc (Cau Giay, Hanoi) is a public servant with an average monthly income of less than 10 million VND. With this salaryshe could previously afford basic living expenses such as markets, electricity and water for a family of four. However, in the past 2-3 months, her family's spending fund is becoming "overburdened" due to escalating prices.

"This fact makes my family have to find ways to cut spending and find more ;left-hand’ jobs to have more income", Ngoc lamented.

Focus on core solution

Rising CPI is creating concerns about inflation control. According to Minister of Finance Ho Duc Phuc, at the question-and-answer session on financial issues on June 8 in the hall of the 3rd session of the 15th National Assembly, inflation in the US is currently at 8.3%, inflation in Europe is at 8%, Singapore is 5.4%, South Korea is 4.8% and Thailand is 4.6%.

However, the inflation index in Vietnam is currently 2.25% (the target set by the National Assembly for the whole year 2022 is less than 4%). Although this is a quite positive number in the current context, there will also be many challenges and difficulties in ensuring the set goals.

Vietnam's economic annual report 2022, conducted by a group of authors from the Institute for Economic and Policy Research (VEPR), predicts that Vietnam's inflation in 2022 is expected to be in the range of 4 4.5%. VEPR studied a series of strong impact factors, from the supply chain such as supply shortage, sudden increases in aggregate demand, labor shortage, petrol prices and electricity prices are forecasted to increase due to increased production and consumption demand in the coming time, as well as food prices increase in line with world prices due to supply chain disruptions; consumer demand at the end of the year increased and the region's minimum wage increased.

However, the report also said that policies to reduce taxes, fees and charges have helped reduce pressure on the price level. In particular, the flexible exchange rate policy has kept the VND relatively stable, helping reduce import pressure on inflation.

Minister of Finance Ho Duc Phuc said that, in addition to the objective factors that are having a negative impact on inflation control, it is fortunate that the country has self-control. food and food products - items that account for 40% of total goods.

This is the golden time for the country to make a breakthrough in the development of domestic production and consumption, the Minister said. If we take advantage or take advantage of this opportunity to create and develop, we will surely turn up because the inflation pressure in other countries is very high right now.

Many experts recommend that, in order to control inflation, the most important thing is monetary policy needs to maintain a state of "adaptation" to the current state of the economy, while continuing to balance inflation and financial risks with support for economic recovery, smoothing the flow of capital.

In addition, it is necessary to continue promoting the development of the bond market and the stock market, but it is vital to publicize information and transactions, and promote the professionalism of market participants. It is also necessary to manage inflation expectations well, prepare contingency measures and act quickly and consistently if the risks of expected inflation gradually increase, while clearly communicating the scenario, roadmap and action conditions to the public, ensuring not to forget the goal of maintaining price stability and protecting the reputation of the State Bank's policies.

In the future, the Ministry of Finance will continue to control core inflation in 2022 to create a basis for general inflation control; continue to closely monitor the world economic situation and inflation, price movements of fuels and strategic materials, on that basis, step up the work of synthesis, analysis, forecast, and construction. Before the scenario and response plans for each item in the event that goods on the world market continue to increase, it must manage domestic production, balance and control supply and demand, and stabilize prices appropriately.

Another important solution also pointed out by the Minister of Finance is to promote the development of enterprises, promote the development of business households and ensure social security, restructure the economy, and make breakthroughs in infrastructure and digital transformation.

According to Minister Ho Duc Phuc, the core of the economy is fiscal and monetary policies, but these policies must be directed at businesses and people. People and businesses do business effectively, have incomes, increase GDP, increase budget payments, create jobs and improve their stock market.

Therefore, it is necessary to prepare all the best conditions for administrative procedures, as well as digital transformation infrastructure and scientific and technical advances, for businesses and people to produce and do business effectively.

Edit the Law on prices: Legalise price analysis and forecasting Edit the Law on prices: Legalise price analysis and forecasting

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“This is the fundamental solution to fight inflation in the best way," said Minister Ho Duc Phuc.

By Thuy Linh/ Huu Tuc