Inflation control targets easily met despite high raw material prices

People go shopping at the supermarket system of Saigon Co.op. Photo: T.D.

Many opinions stated that the sharp increase of value in gas, gasoline and other consumer goods would certainly affect CPI in the remaining months of 2021. Based on CPI movements from the beginning of the year until now, it could be said that the inflation rate in 2021 would be lower than 4%. This was a success due to the macroeconomic management of the Government and its ministries.

However, the increase in the price of gasoline and some essential commodities at the end of the year could become a factor that pushes up inflation, requiring further control measures.

According to the Ministry of Finance, the increase in the price of raw materials globally had caused direct and indirect impacts on the domestic price level, especially for commodities whose prices were referenced from world prices, or being affected by import prices. However, in the context of low inflation in the first 10 months of the year (average CPI in the first 10 months increased by 1.81%), it was found that the high price of raw materials had not put great pressure on the implementation of inflation control target in 2021.

Recently, at the meeting of the Steering Committee for Price Management, Deputy Prime Minister Le Minh Khai, Director of the Steering Committee for Price Management, directed the ministries and sectors to control inflation as expected at 2.0% in order to contribute to supporting production, promoting economic development and social well-being. In unusual cases it was not expected to exceed 2.5%, ensuring the target set by the National Assembly and the Government.

However, the Steering Committee also said that inflation pressure in 2022 was formidable, especially as trends speculated an increase of raw materials prices, particularly in the period of early 2022. Consumer demand normally increases during the Lunar New Year holiday. The total demand of the economy should recover when the pandemic is under control, however.

On that basis, the Deputy Prime Minister has directed the management of prices in the remaining months of 2021 and the beginning of 2022. They advised it will be necessary to continue carrying out careful, flexible and proactive international market developments and regularly make specific assessments and forecasts in order to have appropriate solutions in time. Simultaneously, he has directed a focus on controlling inflation and supporting the implementation of the Government's dual goal, which is to keep the price level stable, in order to remove difficulties for production and business.

The Deputy Prime Minister requested line ministries to closely monitor supply and demand as well as the market prices of important and essential commodities, to proactively remove difficulties and have a plan to regulate the source of goods to increase the supply for pandemic-hit localities that require isolation or social distancing. This will ensure a sufficient supply of essential goods for the people, especially during the Lunar New Year, 2022.

The People's Committees of provinces and cities should step up the supervision of price declarations, price listings, and price disclosures. They should strictly control price-forming factors for goods and public services and public non-business services. This will allow competent agencies to proactively plan or integrate into professional plans, and to enhance observation of the law on price management, whilst strictly handling violations of the law.

For specific solutions on management and administration of prices of essential commodities, ministries and sectors need to continue to coordinate in operating petrol prices flexibly, ensuring that domestic gasoline prices follow price movements of petroleum products in the world. At the same time, they need to calculate the appropriate level of provisions to use of the Price Stabilization Fund, so they can create room for price management in the last months of the year.

Along with that, it is necessary to closely monitor the supply and demand for pork products, especially at the end of the year, in order to avoid the situation of sudden price fluctuation when supply is interrupted from the re-herd.

It is also necessary to strengthen the inspection and supervision of declarations, the listing of prices and the sale of tickets at the correct listed prices for businesses operating transport services, especially during the time of New Year.

For goods and services that are priced by the State, they should be kept stable to ensure overall inflation control, as well as contributing to supporting businesses and people. However, it is necessary for the State to take initiative in plans in order to be able to adjust some goods and services, if necessary.