Price Hikes Threaten CPI Target

3:26:30 PM | 7/8/2005

Price Hikes Threaten CPI Target


With prices unpredictably fluctuating in local and global markets this year, Vietnam will likely have trouble keeping the growth of its consumer price index (CPI) below 6.5 per cent, a price researcher said.


Ngo Tri Long, deputy director of the Finance Ministry's Prices and Market Research Institute, said Vietnam’s dependence on imported materials as global prices peak is causing difficulties in controlling the index and thus inflation.


Long said Vietnam currently has to import 100 per cent of its petrol products, 80 per cent of its steel ingots, 90 per cent of urea and 60 per cent of pharmaceutical products. Meanwhile international organisations have predicted the price of oil will remain high, and the prices of steel, chemicals and cements will likely go up.


The US dollar strengthening may be another factor that affects the price index, Long said.


In addition, the return of avian flu and the salary reform will affect the country’s target for the CPI. This year, Vietnam must spend another VND27 trillion (US$1.71 billion) for salary hike.


Long said, however, if Vietnam can keep the consumer price index below 3.5 per cent in the first quarter, it can hit its target of 6.5 per cent for the whole year, as prices often hit the highest levels in the first three months of a year.


Last year, the index climbed 9.5 per cent against the targeted 5 per cent.

  • VNS