Heavy Inflation pressure in 2022

Ms. Nguyen Thu Oanh, Director of Price Statistics Department (General Statistics Office).

According to the data just released by the General Statistics Office, the core inflation rate in 2021 is the lowest since 2011. How do you assess the core inflation index in 2021?

On average, core inflation in 2021 will increase by 0.81% compared to 2020, lower than the general average CPI (up 1.84%), which reflects fluctuations in consumer prices mainly due to food prices, gasoline, oil and gas.

Core inflation in 2021 year-over-year is the lowest since 2011.

The lowest increase of CPI in the past six years is due to the outbreak of the fourth Covid-19 wave along with strict lockdowns and prolonged social distancing (especially in the third quarter of 2021) which impacted people's consumption demand.

In addition, to support people and businesses, in 2021, the Government has requested to reduce electricity, domestic water and telecommunications prices, not to increase tuition fees and hospital fees according to the roadmap, even exempting tuition fees in 2021-2022.

In your opinion, what inflation pressures will Vietnam face in 2022?

If the Covid-19 pandemic is controlled in 2022, inflation will be affected by the increase in the price of raw materials such as gasoline, coal and transportation. Importing raw materials at high prices will affect negatively production costs and product prices, thereby pushing up the prices of domestic consumer goods, and putting pressure on inflation.

In addition, the increase in import prices of animal feed and raw materials for animal feed production will affect food prices. The price of housing maintenance materials included in the CPI will also increase with the price of materials used in construction.

The price of educational services increased again because some localities ended the period of exemption and reduction of tuition fees for the 2021-2022 school year and the impact of the implementation of the roadmap to adjust educational service prices according to Decree 81/2021 /ND-CP which stipulates the mechanism of collection and management of tuition fees for educational institutions under the national education system and policies on tuition fee exemption and reduction, support for study costs, and prices of educational services in the national education and training system.

Besides, when the Covid-19 pandemic is under control, the demand for food, travel and entertainment will increase again, which also has a significant impact on the overall CPI.

In order to curb inflation in 2022, what solutions will Vietnam need to implement?

To prevent high inflation in 2022, a number of solutions have been proposed. Firstly, the Government, ministries, sectors and localities need to closely monitor price and inflation movements in the world, and promptly warn about risks affecting prices and inflation in Vietnam.

In particular, it is necessary to evaluate and identify which items and materials are likely to be short-term or in the long-term in order to come up with appropriate policies.

Secondly, the Ministry of Industry and Trade and the Ministry of Finance closely monitor the world petroleum price movements, and at the same time combine the Petroleum Stabilization Fund to limit  the price increase of commodities.

The Ministry of Industry and Trade should proactively prepare conditions to promote production and business, ensure supply and circulation of goods, and reduce inflationary pressure. In particular, the Government's policies and solutions must be timely and accurately informed in order to eliminate false information about market prices, to prevent inflation.

Third, raw material prices in the world will continue to increase in the future. Therefore, the Government should make efforts to implement diplomatic measures to ensure the source of raw materials by strengthening cooperation with the Governments of resource-rich countries, supporting enterprises to sign long-term import contracts of raw materials, ensuring the source of input materials, stabilizing production costs to control inflation.

Thank you very much!