Inflation Pressure for H2

According to the General Statistics Office, the CPI increased by 2.35 per cent in the first 6 months, compared to 2.35 per cent and 1.72 per cent over the same period of 2015. The GDP in the first 6 months of 2016 was only 5.52 per cent compared to the 6.32 per cent of the same period of 2015. Regarding the relationship between GDP and CPI in the last 6 months, the experts highlighted that the scenario of declining growth, rising inflation, reducing consumption will be replaced by the scenario of high growth, low inflation, and high consumption.

 

Talking about the reason for increase of the CPI, the representatives of the Price Management Department of the Ministry of Finance noted that the price volatility of health services and education in correspondence with the market, fuel and materials, food, along with the adjustment of the minimum wage and wage base, has made a strong impact on the price index.

 

In particular, the gasoline prices in the second quarter increased in response to the upward fluctuations of the world market. The food prices have increased since mid-May because the rice traders have procured the rice for export contracts signed; besides, the drought and salt invasion in Mekong Delta provinces have affected the grain supply. The consumption demand for some food items during the Lunar New Year and holidays also pushed prices up slightly in some periods. In particular, due to new price regulations, the price of medical services, insurance and education has been increased by 23.14 per cent and 4.47 per cent.

 

The pressure on the prices of goods and essential services has made the price index increase in the first 6 months; however, the price is projected to increase most in the last 6 months. This fact shows that the increase of the consumer price have put pressures on controlling target inflation.

 

According to economic expert Ngo Tri Long, the inflation has exposed the unexpected developments because from now until the end of the year, there are many factors like price adjustment in the medical supplies and education, natural disasters, weather, crop failures, and increase of the basic salary that put pressure on the CPI.

 

The representative of the Price Management Department raised concerns on the challenges caused by many factors that can impact the CPI. Political issues and actual demand of many countries around the world will continue to affect not only the prices of exports like oil and gas as well as other raw materials but also the domestic commodity prices through import channels.

 

Besides, how to balance the budget and adjust the price of public services, health, and education in accordance with the market schedule, exchange rate and interest rates is one of main goals to control the inflation and deal with the market fluctuations.

 

Mr Nguyen Loc An, Deputy Director of the Domestic Market of Ministry of Industry and Trade, said that to implement effectively the measures to promote the growth and consumption of goods, control inflation, and stabilise the economy to ensure the macroeconomic and social security, it is necessary to boost trade promotion, review the monetary policy easing and fiscal control real estate market, and promote the investment through the state budget.

 

For the petroleum products, to avoid the impacts of the gasoline price on the CPI that is usually higher at the end of the year due to increasing consumption demands, it is necessary to use the Price Stabilisation Fund, along with the adjustment of the gasoline price one month before Lunar New Year to the second lunar month.

 

The Ministry of Health should consider rescheduling the adjustment of the medical expenses at the end of the year to limit the increase of the CPI. It is necessary to avoid the big changes happening at the end of the year, holidays and New Year in order to limit the impacts on the CPI.