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Rewriting inflation scenarios after petrol price hike
The inflation rate for 2008 may be higher than any figures previously predicted by state management agencies and economists due to the unexpected petrol price hike.
Earlier this month, the Ministry of Planning and Investment (MPI) made commitments about the inflation rate for 2008, giving three inflation scenarios with the highest inflation rate forecast at 1.5%/month.
In the lowest scenario of the three, according to Deputy General Director of the General Statistics Office, the CPI increase would be 1% from now to the end of the year, provided that the prices of input material prices remained stable.
Now, with the petrol price increase, the condition Lam laid down cannot come to pass, which also means that the scenario has become unfeasible.
With the sharp 30% petrol price increase, experts are finding it difficult to maintain faith in the 1.5%/month CPI increase.
The noteworthy thing is that two weeks ago, a high-ranking official of MPI asserted that the petrol price would not increase, at least until the end of the year.
Businesses, the most important part of the national economy, are now facing big challenges. They once believed that the statements made by state management agencies about the petrol price were serious statements and commitments, and they drew up business plans accordingly.
Now they know the value of such declarations.
MPI was the ministry that heavily criticised the plan on raising the petrol price, saying that a price increase at this moment would make all efforts to curb prices fruitless.
It is clear that the three inflation scenarios GSO’s experts designed are meaningless in the new conditions. It would be better for them to start designing a fourth scenario now.
Meanwhile, enterprises will also have to rewrite their business plans, which means several hundreds of thousands of business plans will be rewritten, just because of the unexpected decision by management agencies.
VNN
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