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Petrol price hike will make CPI grow by 1.5%more
Senior Economist Le Dang Doanh believes that the petrol price increase will make the consumer price index (CPI) increase by 1.5% more, not 0.6% or 0.7% as the Ministry of Finance thinks.
Doanh said that the government needs to have suitable policies to help businesses overcome difficulties that will come about as a result of the petrol price hike.
He said:
Not only me, many other economists are also astonished by the unexpected decision on raising petrol prices by 30%. This proves to be a very high increase if compared to the payment capability and the incomes of the majority of people.
I can say for sure that the 30% petrol price increase will influence the CPI in the time to come. I think that the petrol increase will make the CPI increase by 1.5% more, not 0.6% or 0.7% as the Ministry of Finance thinks.
Transport, garments and fisheries will be the first ‘victims’ of the petrol price hike. These business fields have been making every effort to struggle against high expenses. I don’t think that the businesses can overcome the difficulties by themselves; they will need the support of the government to survive the difficult period.
Other countries in the world all are supporting their businesses. It would be regrettable if fisheries became stagnant and garment companies couldn’t export because of the petrol price hike.
It seems that management agencies are very self-confident in their ability to control inflation, even with the petrol price hike.
I won’t comment about the self-confidence in macroeconomic management. I just want to say that the petrol price hike will surely influence the macroeconomy; therefore, the government needs to be very vigilant.
I myself advocate the viewpoint that the prices need to be managed on the market-economy basis. Vietnamese people are a part of the world, so they have to bear the influence of the world’s prices. They are not on an isolated island where they can purchase petrol at low prices for all their lives.
However, everything needs to be done following a roadmap, and the government needs to give support to enterprises which have to bear the most serious petrol price hike impacts.
Some experts have said that the government should have notified the public in advance about the petrol price increases, it should not release decisions so unexpectedly. What is your opinion about that?
In principle, policies must be predictable, so that people can prepare for the changes with the policies. For example, people should be informed that the domestic petrol price will be adjusted, if the world’s oil prices hit certain levels.
The government said that it needed to adjust the petrol price in order to ease its burden of compensating petrol importers for losses. However, the petrol price increase will ignite a new wave of commodity price increases. Do you think that the government really needs to swap the state budget burden for a new price storm?
In adjusting petrol prices, the government does not think there will be an economic disturbance. However, we need to prepare for a possible new price increase wave
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