VietNamNet Bridge – The price increases scheduled for public services and
essential goods are believed to trigger new price increase waves.
Current factors back high inflation
The Academy of Social Sciences of Vietnam has given a forecast that the
inflation rate in 2013 would be between 7.32 percent and 8.84 percent.
Meanwhile, ANZ Bank has predicted that the inflation rate would be 8-10 percent,
which is not too different from that predicted by VEPR, an economic and policy
research center under the Hanoi National University.
VEPR said the only factor that helps curb the inflation – the food price
decreases – would not be maintained in 2013. Meanwhile, a series of factors that
back the high inflation have turned up. These include the planned basic salary
increase, the healthcare service increase, electricity price increase and the
increases of some kinds of fees.
Besides, the high inflation may occur on the possible dong/dollar exchange rate
adjustment.
According to the National Finance Supervision Council, if the Vietnam dong
depreciates by three percent, the consumer price index (CPI) would increase by
0.3-0.4 percent further. If the electricity price increases by 10 percent like
it did in 2012, the CPI would increase by 0.4 percent, and if the petrol price
increases by five percent, the CPI would increase by 0.1-0.15 percent.
If the prices of all the three essential goods increase at the same time, this
would lead to the CPI increase of 0.8-1 percent.
Therefore, economists have warned that the government needs to thoroughly
consider when to adjust the essential goods prices, or the price increases would
have big impacts on the expected inflation.
Dr. Vu Dinh Anh, a well-known Vietnamese economist, said he cannot see any
abnormal things in the first two months of the year. However, he has warned that
the biggest challenges for the inflation this year are the huge sum of money to
be pumped into circulation to serve the restructuring and the implementation of
the loosened monetary policies to ensure high economic growth rate in 2012.
It may happen that the cash flow, together with the electricity, petrol price
increases would lead to a very high inflation rate.
Price stabilization packages necessary
The government has agreed to the establishment of an inter-ministerial price
management taskforce, in charge of ensuring the better cooperation among
ministries and branches in controlling prices and the inflation.
The establishment of the taskforce and its operation mechanism would be
instructed by Deputy Prime Minister Vu Van Ninh.
Emphasizing the importance of the works to control prices, the National Finance
Supervision Council has proposed the government to strengthen the cooperation of
management agencies to set up a “price stabilization package.” If so, the price
increases would be made at reasonable moments in order to avoid possible bad
influences to the national economy and people’s lives.
Dr. Nguyen Dinh Cung also thinks that it’s necessary to set up an
inter-ministerial taskforce at this moment. Though the plans to raise the prices
of essential goods and public services have been announced, it would still be
necessary to think about the moments to implement the plans, or this would cause
the macroeconomic uncertainties.
Cung has suggested a solution for the long term that Vietnam needs to set up a
market supervision council, the agency which would be independent from
government agencies.
In September 2012, the CPI unexpected increased sharply by 2.2 percent, which
went beyond the expectations of policy makers and experts as well. It was
because the healthcare services were raised at the same time in 32 localities at
the same time, while the tuitions were raised in 42 localities.
NLD