Fri. Jun 14th, 2024

VietNamNet Bridge – The National Financial Supervisory Commission
said on Monday that price management policies are the key factor for
curbing inflation this year while impacts of other macro elements would
not significant.

According to the commission’s
macro-economic report released on Monday, inflation rose 2.6% in the
first two months of this year. However, the commission said that this
figure is not a threat to the Government’s target to curb inflation
below 6.8% this year.

The commission in this report commented
that demand-pull inflation has caused little impact on inflation this
year as total demand remains weak while monetary factor is causing
certain pressure on inflation. Cost-push inflation, which is caused by
rising input and production costs, is not a worrying sign as goods
prices are expected to stay stable in 2013.

Therefore, Vietnam
should concentrate on price management to control inflation. Especially
in early months of this year, price adjustment must be timed reasonably
and suitable to developments of the local economy, the report said.

Data
of the General Statistics Office showed that material and fuel price
index for production rose 1.12% in the fourth quarter of 2012 after
retreating 0.17% in the previous quarter. Therefore, material and fuel
prices have seen a mild uptrend.

The world’s food prices are
expected to increase but Vietnam, as a rice exporting country, will
suffer litter impact from this problem. Monetary policies will not
really influence inflation as well if the Government has measures to
control money supply and total demand of the economy.

Given
these explanations, the commission said that the key factor of inflation
control is the price management policy, especially in electricity, oil
and gas sectors.

If Vietnam dong devaluates by 3%, the
nation’s CPI (consumer price index) will rise 0.3-0.4%. Meanwhile, the
CPI will increase by around 0.4% given a 10% rise in electricity prices
and by 0.1-0.15% due to a 5% increase in gasoline prices. If the three
factors are adjusted at the same time, the CPI will move up around
0.8-1%.

The central bank recently has announced to not
devaluate the dong while stabilizing foreign exchange rate to prevent
impacts of the monetary market on inflation. Besides, the Government has
yet to approve gasoline price hike and decided to increase subsidy from
the price stabilization fund to avoid domino effects on inflation.

The
commission urged cooperation among managing agencies to create a price
stabilization package including road maps for electricity, gasoline and
public service price hikes to secure reasonable allocation of price
increases.

These agencies should avoid increasing prices in
months with seasonal high CPI or in sensitive time that may boost up
expected inflation.

Source: SGT

By vivian