6 solutions to consider to achieve the goal of controlling inflation

Inflation is properly controlled, supporting economic growth

According to the General Statistics Office, inflation in the first 9 months of 2024 is at 3.88%, there is still a lot of room to achieve the inflation target this year according to the National Assembly's Resolution No. 103/2023/QH15.

Inflation in the first 9 months of 2024 is at 3.88%, there is still a lot of room to achieve the inflation target for the whole year as set by the National Assembly in Resolution No. 103/2023/QH15. Photo: Thanh Hong

Speaking to reporters, Ms. Nguyen Thu Oanh - Director of the Price Statistics Department (General Statistics Office) said that there are many reasons for Vietnam's successful control of inflation in the past 9 months. The first reason is that the cooling of world inflation has affected Vietnam's inflation.

Specifically, the inflation rate of the Eurozone in September 2024 increased by only 1.8%, the lowest in three and a half years and below the target of 2% of the European Central Bank (ECB). In August 2024, inflation in the US increased by 2.5% compared to the same period last year; Spain increased by 2.3%; Germany increased by 1.9%; France increased by 1.8%. In Asia, inflation in August 2024 in India increased by 3.7%; Philippines increased by 3.3%; Japan increased by 3%; Indonesia increased by 2.1% and South Korea increased by 2%. Inflation in Vietnam is controlled at an appropriate level to support economic growth, CPI in September 2024 increased by 2.63% compared to the same period last year.

“The cooling of global inflation has helped Vietnam reduce pressure from the inflationary import channel, the average import price index of goods in the first 9 months of the year decreased by 1.73% compared to the same period last year. In particular, petroleum products, one of the items that accounts for a large proportion in the basket of goods used to calculate Vietnam's CPI, while the price of this item depends mainly on world prices. Therefore, the decrease in world oil prices caused the domestic petroleum price index in the third quarter of 2024 to decrease by 7.72% compared to the same period last year, which affected the overall CPI by 0.28 percentage points,” Ms. Nguyen Thu Oanh informed.

In the first 9 months of 2024, to control inflation according to the target set by the National Assembly, the Government has also directed ministries, branches and localities to resolutely implement many solutions such as: Ensuring smooth supply, circulation and distribution of goods, especially essential goods for people's lives. Focusing on strengthening price management and operation during natural disasters and floods, promptly issuing national reserve goods to support and provide relief to people affected by storms and floods.

In addition, the Government continues to implement policies to support people and businesses on taxes, fees and charges, such as reducing environmental protection tax on gasoline, oil and grease; reducing VAT by 2% on some groups of goods and services; reducing 50% of registration fees for domestically produced and assembled cars; reducing collection rates for 36 fees and charges to support cost reduction for businesses and people in 2024. In addition, proactive, flexible, timely and effective monetary policy also contributes to controlling inflation.

Several factors could increase inflation in the final months of the year. Photo: Minh Quan

Inflation risk remains high, need to focus on 6 solutions

Resolution No. 103/2023/QH15 of the National Assembly has approved the inflation target for 2024 at 4 - 4.5%. According to Ms. Nguyen Thu Oanh, although inflation in the first 9 months of the year was at 3.88%. However, some factors may increase inflation in the last months of the year such as: Risks of natural disasters, adverse weather may impact the increase in food and food prices in some localities. At the same time, according to the law, in the last months of the year and on holidays and Tet, prices of food, food, beverages, clothing, equipment and household appliances often increase, which will also impact the increase in CPI. Along with that, the forecast of strong increase in electricity demand for production and consumption in the coming time and the adjustment of service prices managed by the State may increase inflation.

The world's input material prices are high while the world's economic and political situation is becoming increasingly complex and unpredictable. Vietnam is a country that imports many raw materials for production, so fluctuations in world commodity prices will affect costs and prices, creating pressure on business production and thereby pushing up domestic consumer goods prices. Not to mention, stimulus packages, lowering lending interest rates, expanding credit, and boosting public investment help to ease economic difficulties, but they can also put pressure on price levels if money supply is not properly controlled...

“If the consumer price index in the last months of the year continues to increase, it will create high expected inflation and create pressure to control inflation for 2025,” Ms. Nguyen Thu Oanh analyzed and said that in order to control inflation in the last months of the year, it is necessary to pay attention to 6 factors, including:

Firstly , domestic commodity prices depend heavily on the international market, while the current world political situation is very complicated and unpredictable, there is a possibility that the disruption of the supply chain will become increasingly severe. Although the world's input material prices have decreased in recent times, they are still high, and oil prices are currently on an upward trend again. Vietnam is a country that imports many raw materials for production, so fluctuations in world commodity prices will affect costs and prices, creating pressure on business production and thereby pushing up domestic consumer goods prices. Therefore, it is necessary to closely monitor world developments to have appropriate domestic solutions.

Second , the Vietnamese economy is recovering from the pandemic, so it is forecasted that the demand for electricity for production and consumption will increase sharply in the coming time, which will also put pressure on inflation. According to calculations by the General Statistics Office, a 10% increase in the electricity price index will impact the CPI by 0.33 percentage points.

Third , adjusting the prices of state-managed services in a way that correctly and fully accounts for all factors and implementation costs will increase the CPI. Therefore, it is necessary to be careful about the timing and level of price adjustment of state-managed goods.

Fourth , to promote economic growth, we implement stimulus packages, lower lending interest rates, expand credit, and promote public investment. This can also put pressure on price levels if money supply is not properly controlled.

Fifth , risks of natural disasters and adverse weather can increase food prices in some localities.

Sixth , according to the law of consumption, in the last months of the year and on holidays and Tet, prices of food, beverages, clothing, equipment and household appliances often increase, which will also impact the CPI increase.

Source: https://congthuong.vn/6-giai-phap-can-quan-tam-de-dat-duoc-muc-tieu-kiem-soat-lam-phat-353389.html