Pork and oil prices key to keeping inflation under control: experts

Close watch must be on pork and oil prices to keep inflation under control. - Photo kinhtedothi.vn

According to Nguyen Ba Minh, director of the Institute of Economics – Finance, two factors will weigh on inflation in the second half of this year. The first is the prices of commodities in the global market, which are forecast to increase as the COVID-19 pandemic is gradually contained and production and trade recover.

The second factor is natural disasters and diseases in Vietnam, such as African swine fever, drought, saltwater intrusion and extreme heat which would affect agricultural production as well as supply and demand of goods in the market.

Inflation is currently under considerable pressure and the consumer price index (CPI) jumped 0.66 per cent in June against the previous month, the largest increase since 2016. However, Minh said the Government’s target of keeping inflation under 4 per cent would be achievable, provided that price and market management policies are appropriate and timely.

In a conference on inflation forecast in the second half on Thursday, Nguyen Duc Do, the institute’s Deputy Director, said pork and oil prices would need special attention.

Do cited analysis of the General Statistics Office that the increase of 68.2 per cent in pork prices in the first half of this year pushed up the overall CPI by 2.86 per cent. However, tumbling oil prices made up for the increase in pork prices, which helped the lower prices of the transport services category by 9.26 per cent.

With the CPI expanding by 3.17 per cent in the first half of this year, Do said the CPI must be kept at below 0.6 per cent per month till year-end to keep the CPI for the full year at 4 per cent.

The target was achievable, Do said, adding that the Government must act to lower pork prices by importing pigs and promoting reproduction.

Vu Vinh Phu, chairman of Hanoi Supermarkets Association, said if oil prices did not see significant increases in the second half of this year, forecast at about US$40 per barrel, lowering pork prices would help control inflation.

Phú urged the Government to have strict measures to handle unreasonable increases in pork prices.

Economic expert Ngo Chi Long, however, noted that price management and inflation control would be more difficult this year as the COVID-19 pandemic was weighing on the economy. Risks existed, especially if the coronavirus were to start spreading in the country again, Long said, adding that caution in price management was vital. Long said it was also important to have a reasonable roadmap for a power price adjustment and increases in textbook prices.

The Government must also remove difficulties for businesses to accelerate economic growth, he added.

At the meeting with the Steering Committee on Price Management early this week, Prime Minister Nguyen Xuan Phuc insisted inflation must be kept under 4 per cent this year without tightening fiscal and monetary policies to promote growth.