VAT reduction will reduce pressure on price level after Lunar New Year

VCN – The Ministry of Finance has reported on the price situation in the five days of the Lunar New Year and forecast price stabilization after the Tet holiday.
VAT expected to reduce to 8% from early February VAT expected to reduce to 8% from early February
Ho Chi Minh City's economic motivation from import and export activities Ho Chi Minh City's economic motivation from import and export activities
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VAT reduction will reduce pressure on price level after Lunar New Year
The economic support and stimulus policies will have an impact on the price level. Photo: Internet.

The price has not seen unusual fluctuations

According to the Ministry of Finance, January is near the Lunar New Year, so there is a sharp increase in people’s shopping demand, the price of consumer goods and services, and the price of domestic petroleum products in line with world fuel prices made the consumer price index (CPI) in this month rise 0.19% month-on-month.

The CPI in January rose 1.94% and core inflation increased by 0.66% compared with the previous year. The price of nine out of 11 main goods and services saw a month-on-month increase.

The Lunar New Year 2022, which falls at the end of January and early February, is the peak for preparing goods for Tet and increases in the market supply and demand situation. Despite the impact of the Covid-19 pandemic, the production and preparation of goods for Tet were busy.

The Ministry of Finance said the shopping demand of consumers rose from the Land Genie and the Kitchen Gods ceremony to the days before the Tet festival. According to the report, the purchasing power at traditional markets in big cities such as HCM City, Hanoi, Da Nang and Can Tho rose from 5-10% compared with normal days.

On the two days before the festival, the buying power soared 20-30% in retail markets, and 20-50% in supermarkets. However, the demand was still lower than many years ago due to the impacts of the pandemic on the social economy, reducing people's incomes.

In the early days of the New Year, almost all markets and supermarkets have reopened to serve people’s demand. The consumer demand mainly focuses on essential items such as fresh food and seafood, fresh vegetables and fruits, and catering services. In addition, tourism, entertainment, and car parking services are affected by the pandemic.

Through monitoring by the Ministry on the market price in localities, the price of consumer goods in days before, during and after Tet has not seen unusual fluctuations. The increase in the price of some products is in line with the rules of the market or the world prices.

Regarding the prevention of smuggling, commercial fraud and counterfeit goods, the Steering Committees 389 of localities have closely coordinated with local customs branches and market surveillance branches to strengthen the regular control and supervision at border gates of land, sea, railway and domestic airports, border crossings, wholesale markets, and trade centers to effectively prevent smuggling, illegal transportation of animals and animal products, especially pigs and pig products into and out of Vietnam; combat trade and transportation of banned goods, smuggled goods, goods of unknown origin, poor quality goods, tax evasion, and commercial fraud.

The competent forces have focused on controlling items weapons, firecrackers, narcotics, foreign currency, petroleum products and consumer goods during the Lunar New Year to ensure market stability.

In addition, the General Department of Vietnam Customs requested local customs departments to make plans to strengthen the control and inspection for routes importing goods and arranged human resources to perform customs clearance during Tet and prevent goods congestion at border gates at the end of the year, before, during and after the Lunar New Year.

The local tax departments have directed units to perform inspections and examinations to prevent tax loss and trade fraud; coordinated with market surveillance departments to control the transportation and trade of smuggled and banned goods.

Many factors reduce pressure on the price level

The Ministry of Finance also forecasts and proposes measures to manage and stabilize prices after Tet and the whole year such as the high price of petroleum products and LPG due to the impact from the world market.

As of February 11, the prices of petroleum products are forecast to suffer from the great upward pressure of world prices. Therefore, it has put great pressure on the price level and the prices of items using petroleum products as input for production. Besides, the prices of many raw materials and supplies are still under great pressure from the increasing trend of prices around the world. Economic support and stimulus policies will also have a certain impact on the price level.

Some key factors reduce pressure on the price level such as the supply of consumer goods, food and foodstuffs in the country is still high, meeting the needs of the people, so the price is expected not to change and soon return to normal status after Tet; telecommunications and postal services are kept at stable prices or launched discount programs for some customers.

In addition, by implementing the measures of preventing and controlling the Covid-19 pandemic, localities also limit the organization of festivals early in the year. Therefore, the prices of entertainment and tourism services will not change.

From February 1, the VAT on many goods and services will be reduced from 10% to 8% according to the Government's Decree 15/2022/ND-CP, thereby also helping to reduce pressure on the price level.

In addition, the experience and consistency in the policy of stabilizing the macro-economy and controlling inflation of the National Assembly and the Government in the past years and near future will help strengthen the confidence of businesses and people in the stable macroeconomic economy, thereby stabilizing inflation expectations.

According to the Ministry of Finance, the price management and administration in 2022 should be implemented proactively and flexibly from the first months of the year, ensuring control of the growth rate of the average consumer price index for the whole year at around 4% according to the target set by the National Assembly, while continuing to remove difficulties for production, business and people's lives, implement the market price roadmap for public services and goods under the management of the State, and perfect the legal system on prices, and submit it to the National Assembly for consideration and comments on the draft revised Price Law.

Accordingly, ministries, branches and localities continue to effectively follow Resolution 01/NQ-CP dated January 1, 2022 of the Government, and the Prime Minister's direction in Directive 35/CT-TTg dated December 31, 2021, which focuses on solutions to strengthen management and administration to stabilize market prices after Tet.

By Thuy Linh/Ngoc Loan

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