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Inflationary pressure remains unsettled
Despite the consumer price index reported to slow down for the straight second month, economists warn the rampaging inflation has not been quite under control.
Figures from a report by the General Office of Statistic show that the consumer price index (CPI) increased 2.2 per cent this month over last month with the inflation rate reaching 11.6 per cent in the first four months of this year.
“This is the second month we've seen a slow down in the CPI but the index is still very high and we should not be too optimistic,” said Nguyen Duc Hoa, Vice Minister of Planning and Investment.
According to the report, the CPI has been strongly impacted by increases in the global prices of fuel, raw materials and food. Last week, oil price reached a record $118 per barrel while the price of food also surged sharply.
Meanwhile, the country's trade deficit jumped to $11.1 billion so far this month, accounting for 60.8 per cent of export turnover.
“If we can't limit the trade deficit, the government will face a number of difficulties reining in inflation,” said Tran Quang Hoa, head of the Planning Department of the Vietnam Development Bank.
To limit price hikes, the government recently applied a series of measures aimed at absorbing excess currency in circulation and boosting the supply of goods on the market. The Prime Minister also asked firms not to increase the price of essential goods like fuel, electricity, transport, cement, steel, clean water and coal.
According to Ngo Tri Long, former deputy director of the Institute for Market and Price Research, it is still too early to say if the reduction in CPI was the result of the government’s tightening policies.
“Generally, price increases tend to slow in the second quarter as a result of reduced demand. We will have to wait for quite a while to know whether the government's policies have worked or not,” said Long.
In a recent interview with Vietnam Investment Review, Le Xuan Nghia, director of the State Bank's Banking Development Strategy Department said that the tightened monetary policies would not be eased until the central bank saw a CPI decrease.
The government also asked provinces and state-run enterprises to delay or cancel all ineffective and unnecessary projects in order to reduce the supply of money in circulation. However, no province or enterprise has yet reported any delayed or canceled projects. Last week, the government issued a May 20 deadline to report on these projects.
VNN
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