15:57 | 07/05/2019 Economy- Society
(VEN) - A roadmap to increased prices of essential goods and an outbreak of African swine fever have raised public concerns about an adverse impact on the commodity market. However, flexible state management has helped restrain consumer price index (CPI) growth in the first quarter of 2019, paving the way to realization of the annual below-four-percent inflation target.
According to the General Statistics Office of Vietnam (GSO), the CPI decreased by 0.21 percent in March following continuous increases, 0.8 percent in February and 0.1 percent in January. In the first three months, the index grew an estimated 2.63 percent compared with the same period last year - the lowest first-quarter CPI growth rate in the past three years.
Ta Thi Thu Viet, Deputy Director of the GSO’s Price Statistics Department, attributed the CPI decrease in March to a decline in consumer demand after Tet. Moreover, African swine fever detected in different provinces and cities has capped demand for pork and brought down the price. The consumer demand for other kinds of goods, such as textiles, garments, footwear and electronic products declined, too, placing the CPI below its forecast level.
Apart from objective factors, flexible state management has contributed significantly to successful efforts to curb CPI growth. On March 20, the average retail price of electricity was raised by 8.36 percent or VND144 per kWh after long remaining unchanged.
Power price hike
Although the electricity price increase was expected to have a mere 0.33 percent impact on the CPI growth of March, there was concern that it might result in price hikes production of which is power-based. Moreover, the electricity price hike followed a petroleum price increase, raising concerns about a “double impact” on other kinds of goods.
Tran Duy Dong, Director of the Ministry of Industry and Trade (MoIT)’s Domestic Market Department, said global petroleum prices increased in March. To reduce the resulting pressure on the CPI, the Ministry of Finance and the MoIT used the Petroleum Price Stabilization Fund to subsidize increases in domestic prices of these products. On March 18, the fund was used to provide a subsidy of VND2,801 for a liter of E5RON92 petrol, VND2,061 for a liter of RON95 petrol and VND1,343 for a liter of diesel oil in order to keep petroleum prices unchanged. This, in turn, enabled the electricity price hike on March 20 and restricted its impact on the CPI.
African swine fever and information swamping social networks about pork tapeworms have led to consumer concerns and boycott. However, the MoIT has coordinated with other units to prevent the spread of the diseases, while at the same time asking retail businesses, supermarkets and convenience stores to say “No” to pork of unclear origin, and persuading consumers not to boycott safe pork products.
April CPI increase
The CPI is forecast to grow slightly in April due to increases in electricity and fuel prices.
The second-quarter CPI has traditionally affected the annual index heavily. “The GSO requested relevant state authorities not to increase prices of goods they manage, or to consider reasonable price adjustments, to restrict their impacts on the CPI in the second quarter,” Viet said.
The MoIT is responsible for managing supply and demand in order to prevent major changes in pork prices. It also has to coordinate with the Ministry of Finance on changes in global petroleum prices and propose necessary adjustments to domestic prices. The Petroleum Price Stabilization Fund should be used in a reasonable manner. Furthermore, transparency of the input cost of electricity generation should be ensured, as well as production and trade results of power companies.
At a recent meeting of the Government’s Steering Committee for Price Management, Deputy Prime Minister Vuong
Dinh Hue said the government could curb the annual inflation rate within a range of 3.3-3.9 percent.