3:26:29 PM | 7/8/2005
Political instabilities, soaring demands of fast-developing economies such as
Prices of almost all consumer goods increased considerably last year, led by the food-foodstuff group, which account for 48 per cent of the basket for CPI calculation, with a year-on-year increase of 15.6 per cent. Pharmaceutical prices followed with an on-year increase of 9.1 per cent while housing-construction materials were up by 7.4 per cent and transport-postal services up 5.9 per cent.
The selling price of high-quality 5 per cent broken rice as at the end of 2004 stood at US$240 a metric tonne, while 25 per cent broken rice was at US$227/tonne.
The retail price of petrol was raised [by the Ministry of Finance] three times in 2004 [the last time on November 1] with a combined increase of 34 per cent, or VND1,900 (12.1 US cents) higher than in 2003 to stay at VND7,500, VND7,300 and VND7,100 a litre for petrol grades RON 92, RON 90 and RON 83, respectively.
Meanwhile, the price of oil was hiked two times with a combined increase of from VND200-VND500 per litre (only around 6 per cent for each kinds of oil). It means key industries such as coal, power, cement and transportation saw little impact because the major fuel input of these sectors is oil, especially diesel oil.
In the near future, domestic petrol and oil prices may remain unchanged because world crude price is standing at low level of around US$43 per barrel, compared with record high of US$55 last October.
Steel
The local steel market witnessed an unstable year in 2004 due to massive steel billet price hikes on the world market. The domestic construction steel price sometime last year hit a record high of VND9 million (US$577), or around 40 per cent higher than that at the end of 2003.
The construction steel price stood at VND7.4 million (US$471) per tonne early January, up VND200,000 against the end last year.
Steel prices are expected to rise slightly in the coming time because local producers currently have to import steel billet at US$385 per tonne. At the import price, local firms must sell rolled steel at VND8 million (US$513) to have a profit. Many producers are operating only 40 per cent of its design capacity.
Experts forecast that domestic demand for steel this year will increase by 20 per cent on-year. The country will need 3.6 million tonnes of billets and 6-6.2 billion tonnes of steel products, up 15 per cent and 3.3-3.5 per cent against last year respectively.
Coal, cement and fertiliser
Vietnam Coal Corporation (Vinacoal) decided to raise prices of coal dust for the local cement industry by 17.7 per cent to VND455,000 (US$29.2) per tonne and increase the coke coal price for the fertiliser industry by around 40 per cent from January 2005.
With the coal price hike, Vietnam National Cement Corporation (VNCC) estimated that spending on coal purchasing in 2005 would be VND90 billion (US$5.77 million) higher than in 2004. Cement prices are forecast to rise by 5-7 per cent per tonne in 2005.
According to VNCC’s price hike roadmap (submitted for the government’s consideration), average cement price will increase to VND783,200 (US$50.2) this year, VND816,200 (US$52.3) in 2006, VND849,400 (US$54.4) in 2007 and around VND950,000 (US$60.9) in 2010.
Meanwhile, local fertiliser producers also affirmed that they would raise their price soon. The higher coke coal price boosted phosphate fertiliser production costs by VND40,000 (US$2.56) per tonne.
In 2004, local gold price skyrocketed by 11.7 per cent, representing the record high over the past 10 years. The surge in price of the precious metal domestically was attributed to the soaring world price as almost of gold for local consumption is imported.
As analysed by experts, the sharp increase of world gold price over the past year was credited to the depreciation of the US dollar against other hard currencies such as the Euro and Japanese yen and instabilities and political crisis in many regions in the world. Investors bought gold for reserve. Some economic analysts forecast gold prices may reach US$50 per ounce.
With a possible increase in prices of major goods in the coming time and the arrival of the country’s traditional Lunar New Year Festival, which will fall on February 7-10, the Ministry of Trade (MoT) predicted the CPI would witness a strong rise of around 3.5 per cent in the first quarter this year.
The Domestic Market Control Group under the MoT forecasted CPI rise in January at over 1 per cent. The figure in February will be around 2 per cent and 0.5 per cent rise is for March, pushing inflation in the January-March 2005 to around 3.5 per cent, compared with 4.9 per cent in the first quarter of 2004 and 2.5 per cent in 2003. The Government estimates that this year’s CPI will see an increase of 6.5 per cent.
According to the group, a considerable sum of money will be injected into the economy via salary rise (for civil servants), bonuses for labourers and overseas remittances during the festivals.
Vietnamese
