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Higher H2 inflation, annual figure to remain within single digits
Vietnam could experience higher inflation in the second half of this year, but it is unlikely to go beyond single-digits for the whole year, a conference in Hanoi heard Thursday.
“Inflation for the whole of 2009 is estimated at 7.5-8 percent. Inflation in the second half of this year will be double that of the first,” said Dinh Xuan Hang of the Finance Institute.
Vietnam’s consumer price index (CPI) rose 3.9 percent from a year earlier in June, the smallest increase in more than five years. CPI in the first six months was up 2.68 percent compared with the end of last year.
Hang attributed the higher prices in the domestic market to increasing petroleum costs, effects of natural disasters and diseases, and rising cash in circulation coming from the loosened monetary and fiscal policies.
Nguyen Minh Phong of the Hanoi Institute of Socioeconomic Research said the side-effects of the stimulus package and the recovery of the world economy is likely to make the country’s CPI increase to double-digits by the end of this year.
The increase in banking interest rates and foreign exchange rates will also make the risk of an inflation hike in the remaining months bigger, he said.
However, the CPI is “unlikely to surpass the mark of 13-15 percent over the same period last year,” he noted. “It is very unlikely that the shocking prices of 2008 will happen again.”
Late this year will see higher prices of such commodities like property, gold, petroleum products, food, energy, transport services, and stocks of some big banks, petroleum firms, and companies manufacturing items for export to developed countries, including the US and Japan, he said.
Meanwhile, it will see lower costs of telecommunication services, electronic products, banking services, motorbikes and some items, which enjoy import tax cuts under Vietnam’s free trade agreements, and bilateral and multilateral economic partnership treaties.
Phan Thanh Ha, deputy head of the Financial and Monetary Department under the Ministry of Planning and Investment, said: “There are more factors toward making prices increase than those that would bring them down.”
The increases in minimum salary for employees, higher prices of electricity and petroleum products, and high foreign exchange rates will make products’ cost higher. In addition, the expected higher prices of materials in the world market will see production input costs go up in the coming months, Ha said. Now, production materials account for some 60 percent of the total import revenues.
The 92-octane gasoline, after five consecutive retail price increases, has risen by 29 percent over early this year, raising production and consumption costs. Electricity prices have also increased by 8.92 percent on average since March 1.
Vu Dinh Anh, deputy head of the Institute for Market and Price Research, said the crude oil price, which fell to $60 per barrel on July 14, is forecast to drop further in the coming time, because the world economy has not recovered rapidly.
If the forecast is right, and retail costs of petroleum products in the domestic market are cut, inflation could stand at single-digit levels in 2009, he said.
Nguyen Duc Thang from the General Statistics Office said it was necessary to watch closely the implementation of monetary and fiscal policies, follow price fluctuations of essential goods like crude oil, construction steel and food, and also intensify the fight against smuggling and goods speculation.
Ngan Anh
thanhnien
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