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There won’t be price fever in July: MOF
Nguyen Tien Thoa, Head of the Price Control Agency under the Ministry of Finance, said that there will not be a price fever in July as the CPI increased by 2.14% in June over the previous month, an encouraging result.
Thoa affirmed that the eight groups of measures initiated by the government to fight inflation have been an effective remedy for the price increase disease.
In principle, the second half of the year is a time of continuous price increases. Do you think that the government’s measures can still help curb inflation at this time?
The prices always stay ‘soft’ in second and third quarters, while they always move up in the fourth quarter due to the higher demand during the holidays and Tet. Meanwhile, the volume of money in circulation will also be big as purchasing power will increase, which may put hard pressure on commodity prices.
However, I think that if we can implement the government’s measures well, especially the measures relating to monetary policies, we will still be able to restrain the price increases.
Businesses complain that they are facing a lot of difficulties as the government is asking them not to raise prices. Therefore, they cannot make profit to get money for re-investment. What would you say about this?
The government has released a document which stated that electricity, water and public transport fees would stay in place until the end of 2008.
As for commodity items, the prices of which the government asked producers not to increase until June 30, they may see some adjustments. However, the producers and suppliers of these commodity items cannot raise prices spontaneously.
The producers will only be allowed to raise sale prices when they already have done everything they can to cut expenses and raise productivity but they still have difficulties.
The motto of the government is to support businesses and not to leave businesses in difficulties. However, any price adjustment needs to be considered thoroughly, so that the price adjustments do not lead to high inflation. Massive price increases will not be allowed.
Distributors say that they have not received any inform from producers and suppliers about the price increases. Do you think that there will not be big price increases in July?
I do believe that consumer prices will be stable in July. You may well know that food products and services account for 42.8% of the basket of commodities that serves the calculation of CPI. Meanwhile, our agricultural production has been very satisfactory. Vietnam has got a bumper crop in the north and the south is also expecting a good crop. It is very likely that we will have more than 4mil tonnes of rice for export.
Foodstuff prices, I think, will move up, but slightly, because we have successfully controlled epidemics, which once affected the supply.
Storms may occur in July, which may cause difficulties in transporting goods around calamity-stricken areas. However, there will not be a supply and demand imbalance in general, therefore, there will not be a price fever.
You have mentioned the inner factors of the national economy. How about outside factors, the world’s crude oil prices, for example?
As for petrol prices, if the world’s oil price increases to overly high levels, we will have to consider raising petrol prices, so that consumers, enterprises and the state will share the difficulties from the price increases. However, I can say that the state will still compensate petrol importers for losses to stabilise petroleum prices, which will help minimise the bad impacts on the national economy, consumers and businesses.
Do you mean that the government will not raise the retail petrol price in July?
I cannot give the answer ‘yes’ or ‘no’ at this moment, because we cannot control the world’s oil prices. China and countries which heavily subsidise petroleum prices have decided to raise retail prices. And it would be a quite normal thing if Vietnam adjusts its retail petrol price.
With the current oil price and domestic petrol price, the state budget will have to spend a sum of money two times higher than that in 2007. If the world’s oil price increases further, the sum of money the state will have to spend this year to subsidise petrol prices may reach VND48-50,000bil, for diesel alone.
The government well understands that the gap between the petrol price in Vietnam and other countries in the region is gettin bigger and bigger, while the petrol subsidisation has been triggering petrol smuggling across the border gates. However, policy makers should consider the capability of the national economy when designing petrol price schemes.
VNN
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