ANTD.VN - Inflation decreased faster than expected in the first 6 months of the year and is forecast to continue to decrease in the last 6 months of the year. However, prices of many goods to consumers are still high, making people's lives difficult.
This morning (July 4), the Institute of Economics and Finance (Academy of Finance) held a workshop on "Market and price developments in Vietnam in the first 6 months of the year and price forecast for 2023".
Inflation falls faster than expected
According to Dr. Nguyen Duc Do, Deputy Director of the Institute of Economics and Finance, in the first 6 months of the year, inflation peaked in January 2023, but then decreased more sharply than expected.
Year-on-year inflation in June 2023 has dropped to just 2%. The main reason is the low economic growth rate with all components of aggregate demand growing slowly (investment, consumption) or declining (exports).
Along with that, money supply growth is also low. Total means of payment as of June 20, 2023 only increased by 2.53% compared to the end of 2022, lower than the period of the Covid-19 pandemic.
The main reason for the slow growth of money supply is, on the one hand, weak aggregate demand causing low credit demand, and on the other hand, commercial banks restrict lending due to concerns about increasing bad debts. This causes the money multiplier or money turnover velocity to decline sharply.
The third reason for the sharp decrease in inflation is that real interest rates are too high. “According to the announcement of the State Bank, the average lending interest rate until mid-June 2023 is 8.9%. With inflation currently at 2% compared to the same period, the real lending interest rate is 6.9%, higher than the GDP growth rate as well as the average real interest rate of the 2013-2021 period of 5.9% and 4.6%. This is an interest rate that hinders economic recovery and growth, and increases bad debt” – Dr. Nguyen Duc Do assessed.
With the above developments, the expert predicts that the CPI growth rate will continue to be restrained in the last 6 months of the year. Along with that, supply shocks such as oil prices and exchange rates are not as high as in 2022, oil prices are likely to continue their downward trend, and exchange rates will be quite stable...
“Assuming this rate continues to be maintained in the last 6 months of the year, year-on-year inflation in December 2023 is forecast to be at 1.7% and average inflation for the whole year of 2023 will be at 2.5%,” Dr. Nguyen Duc Do predicted.
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Inflation fell sharply in the first 6 months of the year |
Forecasting that the CPI in 2023 will be at 3.5 - 3.8%, Dr. Pham Van Binh (Deputy Director of the Price Management Department - Ministry of Finance) said that compared to other countries, Vietnam is not in the group of countries with high inflation.
The reason is that, in addition to the Government's price management work, inflationary import pressure has also decreased, the supply of food and foodstuffs is abundant, the prices of essential goods have not fluctuated much... also helping to control inflation in the first half of 2023.
Along with that, gasoline products tend to decrease, some construction materials decrease, especially steel...
Consumer life is not very happy!
Although inflation has decreased, the representative of the Price Management Department also pointed out some pressures on price levels in the last 6 months of the year, in which the 20% increase in basic salary from July 1, 2023 will affect other goods and services; electricity prices increase; tourism services continue to recover; prices of essential goods increase according to the law at the end of the year;
Along with that, the prices of textbooks of new sets and some items priced by the State will be adjusted, such as the price of educational services for the 2023-2024 school year, which is expected to increase according to the draft of the Ministry of Education and Training; the price of domestic air transport services will increase...
In terms of the market, although the current assessment is that “prices are relatively stable”, economic expert Vu Vinh Phu believes that the retail market still has many shortcomings. While the price from the producer is very cheap, through intermediary distribution stages to the consumer is high, making purchasing power weak.
“For example, the price of oranges at the garden is only 5,000 VND/kg, but in Hanoi it is still 25,000 VND/kg. Pork has decreased by 37%, the price at the market is down to 130,000 VND/kg, but a survey of some supermarkets is still 200,000 VND/kg. This shows that our price management effectiveness is still weak,” the expert assessed.
In addition, according to him, the price system for many goods and services has increased and not decreased, many service prices have increased secretly... making life difficult for consumers. "Workers are hard-working, they cannot afford a 15,000 - 20,000 VND lunch. Prices are low but consumers' lives are not very happy, we have to overcome this" - Mr. Vu Vinh Phu said.
Mr. Phu also pointed out the shortcomings in the distribution system. Currently, although we have thousands of supermarkets and about 9,000 markets, the amount of clean goods entering supermarkets is very small, only about 10%. Some supermarket systems have a monopoly, making it difficult for goods to enter supermarkets, forcing them to discount, pushing up prices, reducing the competitiveness of Vietnamese goods...
“Vietnam’s goods distribution system goes through too many intermediaries, is complicated, people have low profits, and intermediaries have high profits. Meanwhile, other countries have built short supply chains,” the expert said, emphasizing that Vietnam must reorganize its distribution system, enhance humanity and share with the community, especially in the context of difficult living conditions for workers.
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