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Curbing inflation: a lot of things still need to be done
Though encouraged by the lower consumer price index (CPI) increase in June 2008, experts say that it is too early to breathe a sigh of relief.
The CPI in June 2008, according to the General Statistics Office (GSO), was 2.14%, a considerably lower figure compared to previous months. The lower CPI increase in June brings the hope that inflation will be restrained, and that the national economy will have a brighter picture in the second half of the year.
However, experts say that it is not yet time to start uncorking the champagne. The CPI increase slowed in April, which also made people feel optimistic, but it unexpectedly soared to the highest peak so far this year in May.
When announcing the 2.14% CPI increase in June, GSO said that this was the result of the measures taken by the government in the last time.
Tran Bac Ha, Chairman of the Bank for Investment and Development of Vietnam (BIDV), also said that the first six months of the year were the most difficult period of the national economy, especially in April, when the rumour about the monetary crisis appeared. Ha believes that the most difficult time is over, and the national economy will be supported by good factors in the second half of the year.
However, some analysts say that the slow CPI increase in June should be understood as a periodic decrease rather than the result of the measures to curb inflation.
Deputy Minister of Planning and Investment Cao Viet Sinh also said that in general, the CPI always increases less in May and June.
While the CPIs of many countries in the world have not decreased, or decreased inconsiderably, in recent months, Vietnam’s CPI decrease from 3.91% in May to 2.14% in June should be hailed as good news. However, worries still exist as the CPI increase of the first six months of the year proves to be very high if compared to December 2007 (18.4%). The June 2008 CPI is also 26.8% higher compared to the CPI in June last year.
Economist Vo Dai Luoc said that it is true that the efforts by the government to curb inflation have brought the desired effects; however, it is also true that CPI increases always slow down in June.
Ha of BIDV said that the CPI will keep increasing towards the end of the year, and that the State Bank of Vietnam should apply a suitable interest rate policy which allows it to withdraw money from circulation.
Sinh with the MPI said that the government has never neglected the task of fighting inflation.
Luoc emphasised the need for the two main measures to curb inflation, cutting public investments and tightening monetary policies.
Luoc said that Vietnam needs to pay the price to successfully fight inflation. Businesses that operate ineffectively will have to restructure or be dissolved.
VNN
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