CPI-sparked inflation fears talked down

Glass ceiling: a possible rise in consumer prices has led to fears of inflation levels spiking

The deputy head of the Price and Market Research Institute (PMRI), Nguyen Tri Long, told Vietnam Investment Review that the consumer price index (CPI) could rise by more than 0.5 per cent this month.
“The Ministry of Trade’s domestic market monitoring group has realistically estimated that the CPI could increase between 0.3 and 0.5 per cent this month,” Long said.
“It is also possible that the index could exceed 0.5 per cent, given the increasingly high price of oil on the world market.”
The official said that the rising price of petroleum in Vietnam and around the world would trigger off a chain reaction in the prices of other goods and commodities in May and the coming months.
“Higher oil prices lead to higher transport costs, which affects almost all manufacturing sectors. Therefore, it will result in a corresponding increase in prices of outputs, including essential consumer goods and commodities,” Long said.
He also said that domestic producers would use the rising oil price as a justification for raising the prices of their products, whether or not oil prices directly affected their businesses. Meanwhile, domestic consumers tend to accept the increased price of consumer goods at a time when oil price was going up.
The rising prices of electricity and other inputs such as cement would also drive up consumer prices this month, Long said.
“The increase in CPI will remain below 1 per cent, which means the government is still able to control the rise,” he said.
Nguyen Thi Hien, a member of the Prime Minister’s Research Team, said that the Vietnamese economy would be damaged if the world oil price hit $90 to $100 per barrel as predicted by many international experts.
“I expect that the huge impact of rising oil prices will encourage the relevant countries to work together and keep the price below $60 per barrel,” she said.
Domestic experts also believe that the Government and enterprises should help to keep consumer prices under control.
“The government should have cautious price-modifying policies for several monopoly items such as electricity and steel, in line with the price performance on the market,” Long said.
“Relevant impact and costs stemming from those price modifications must be taken into deep consideration and fully measured for the best price modifying decision, which would help to control inflation.”
According to Le Dang Doanh, a senior consultant at the Ministry of Planning and Investment (MPI), technology and efficiency were the best ways for enterprises to tackle price changes and their impacts.



No. 760/May 8-14, 2006