4.5 per cent inflation roof achievable with close control efforts

Total retail and service consumption revenue in 2024 was up 9 per cent against the previous year, photo Le Toan

Last week, the government underlined the need for authorised agencies to closely follow global inflation to adhere to key tasks on implementing the country’s budget and economic plan for this year.

The plan is to take action domestically to rein in inflation to no more than 4.5 per cent, as set by the National Assembly (NA). According to the General Statistics Office (GSO), a number of factors are expected to pressure inflation this year, such as a hike in basic salary for state-owned units, and an increase in electricity prices and consumption in the domestic market.

As part of the country’s comprehensive revamp of its salary framework, late last year the NA decided to spend more than $4.6 billion on the already-fixed basic salary level of VND2.34 million ($97.50) for 2025. This level works as a foundation for calculating assorted payments for state-owned unit employees.

Last July, the government also applied a 6 per cent rise in regional minimum salary for enterprises in different regions in the country.

Private enterprises in the country are also expecting raises in wages. Under the Salary Survey Guide Vietnam for 2025 released two months ago by recruitment consultancy Robert Walters, 88 per cent of businesses are to offer pay rises this year.

The survey, conducted with over 80 companies in Vietnam and hundreds of candidates across various industries, positions and levels, found that salary and benefits remain the top factors contributing to employee satisfaction, with half of professionals expecting a pay rise in 2025. Salary increments will hold steady at rates of 15-25 per cent this year, said Robert Walters Vietnam.

In December, professional services firm AON announced the findings from its 2024 Salary Increase and Turnover Study for Southeast Asia. The study analysed the salary adjustments and turnover rates of more than 950 companies across Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam.

The survey found that in the whole region, the budgeted salary increases are expected to be higher in 2025 than 2024. In Vietnam, salary increases are predicted at 6.7 per cent.

It was reported that the power retail price will continue rising this year. At a Vietnam Electricity (EVN) conference two weeks ago in Hanoi, it was reported to have reaped a revenue of over $20 billion in 2024, up by over 14 per cent on-year.

In the first half of 2024, EVN reported losses of about $541.7 million. However, after the electricity price was adjusted up by 4.8 per cent on-year from October, revenues balanced out. This was the third price increase after two hikes in 2023. EVN lost up to $1.43 billion from electricity production and business activities in 2023, and over $1.5 billion in 2022.

Deputy Minister of Industry and Trade Nguyen Hoang Long was cited by media as stating that in 2025, the power price will likely be raised to offset EVN’s increased costs.

Meanwhile, the economy is targeted to grow 10 per cent this year, meaning electricity demand will ascend by about 14 per cent on-year, with the total power capacity likely to be added only 1,500MW – insufficient for power consumption, according to the Ministry of Industry and Trade. Last year, the average price for producing electricity, gas, hot water, steam, and air conditioners increased 5.83 per cent on-year.

“The main reason is that EVN adjusted the electricity price up in October. Accordingly, the input electricity purchase price of companies increased, so the price of electricity transmission services had to be adjusted to ensure profits,” the GSO said. “In addition, the cost of input materials for electricity production such as domestic coal prices and labour costs climbed.”

According to the GSO, a hike in power prices contributed to the consumer price index increase of 3.63 per cent in 2024. Specifically, the price of household electricity rose 7.68 per cent on-year, leading to a 0.25 per cent increase in the index.

The GSO also said the government’s efforts to control inflation this year will be affected by an expansion in travel and increased consumption of goods and services.

The total retail and service consumption revenue in 2024 the country is estimated to have reached more than $266.3 billion, up 9 per cent against the previous year.

As compared to 2019, the increase rate was 29.4 per cent, including 31.5 per cent for goods retail revenue, and 39.8 per cent for travelling revenue. The MoIT has set a target that in 2025, the total retail and service consumption revenue will increase 10 per cent against 2024.

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