09:28 | 19/04/2019 Economy- Society
(VEN) - Increased domestic prices of electricity, medical and education services, as well as hard-to-predict changes in global prices of petroleum, will affect the 2019 consumer price index (CPI). Curbing the CPI below four percent requires tight coordination between relevant units.
The Ministry of Industry and Trade and the Ministry of Finance recently decided to maintain stable prices of common petroleum products after increasing the use of the petroleum price stabilization fund. Since the beginning of this year, petroleum prices have been raised only once, reflecting the flexible management of prices of goods by the state to curb CPI growth.
The decision was in tune with the complicated changes in the market prices of various kinds of goods. On March 1, gas prices increased by VND17,000 per cu.m; rice prices in the Mekong Delta also tended to go up after ministries, sectors and localities purchased rice for temporary reserves following the prime minister’s guidelines; swine diseases could push up the price of other kinds of food. Electricity prices went up 8.36 percent on March 20, directly affecting the CPI and causing upward pressure on prices of many other kinds of goods.
Economists believe it will not be easy to achieve the target of curbing the CPI below four percent set by the National Assembly, given the roadmaps to increase the prices of electricity, medical and education services. The USD’s upward trend will also affect the foreign exchange rate in the domestic market.
Trade surplus factor
However, Le Quoc Phuong, former deputy director of the Ministry of Industry and Trade’s Vietnam Industry and Trade Information Center, sees favorable conditions to curb the CPI below four percent. In the 2016-2018 period, the CPI was maintained at below four percent, inflation at below two percent, while the abundant supply of goods helped prevent major price changes; macroeconomic stability created room for further efforts to restrain inflation and promote economic growth.
“The continuous trade surplus in the past several years helped maintain stable exchange rates and reduce the pressure on inflation. A record level of foreign exchange reserves also enabled the State Bank of Vietnam to keep the exchange rate stable. If the trade surplus is maintained, the pressure on the CPI will decrease,” Le Quoc Phuong said.
The Ministry of Industry and Trade is coordinating closely with other ministries, sectors and localities to keep a close watch on changes in the prices of essential goods in order to propose timely solutions to ensure supply-demand balance and stabilize prices.
The Ministry of Finance continues coordinating with other ministries, sectors and the General Statistics Office of Vietnam to propose suitable price adjustments in order to minimize their impact on production and consumer life.
Economists believe successful efforts to curb the CPI in the first quarter of 2019 will facilitate price management by
the state throughout the rest of the year, paving the way to achieve the annual below-four-percent target.