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CPI subjected to intense scrutiny in last quarter
Vietnam should put in a great deal of effort to stabilise its macro economy with the aim of keeping inflation in check, said Dr Vu Dinh Anh, a senior official of the Ministry of Finance (MoF) in an interview granted to the VOVNews.
Dr Anh, head of the Price and Market Research Institute, said the Government’s solutions to curb runaway inflation have achieved initial positive results, with the consumer price index (CPI) reaching 1.13 percent in July and likely rising to 1.5-1.6 percent in August.
He said many people were worried that the MoF’s decision to raise retail petrol prices by 30 percent on July 21 would spark a new price spike. In fact, the prices of many essential commodities have remained unchanged, or have fallen slightly. Transport businesses had to adjust their plan to raise transport costs following the MoF’s decision to lower retail petrol prices by VND1,000/litre to VND18,000 on August 14.
“Without strong fluctuations in petrol prices, the CPI in September would be lower than in August,” Dr Anh forecast.
However, he warned that the CPI will increase considerably in the last months of the year. He recalled that in late 2007 the CPI surged sharply, even by 40 percent in a month. An excessive expansion of the credit market with additional cash in circulation was one of the reasons that pushed up the CPI.
Learning from last year’s experience, the Government has put forward effective solutions to control the CPI in the remaining months of the year, said Dr Anh.
He went on to say that fluctuations in the CPI will depends on oil prices and political developments in the world. It is likely that investors will step up the disbursement of capital for construction projects in the last quarter. This is contrary to the Government’s efforts to tighten financial and monetary policies.
According to the economist, another problem is that it is difficult to handle real estate projects worth more than VND135 trillion which have been suspended since last year. If the Government decides to withdraw from these projects, investors will go bankrupt. In case banks continue to help them, it will be difficult to reduce the amount of money in circulation.
“We must patiently pursue the goal of stabilising and developing the macro economy. Breaking loose from the chosen path will only put ourselves at risk,” said Dr Anh.
VOV
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