Many housewives worry that when their salaries increase a little, prices will start to rise as well - Photo: TTD
Because previously, many items had increased in price sharply in the first six months of 2024, while income had not yet recovered due to economic difficulties, creating great pressure on the economy of many households.
Big challenge with price
Economist Le Duy Binh - Director of Emonica Vietnam - emphasized that salary increase is very necessary, increasing income for officials and civil servants, creating motivation to promote labor productivity. Implementing salary reform policy is also necessary to stimulate demand, increase domestic consumption in the context of many economic difficulties.
However, Mr. Binh is concerned that without a reasonable solution, the wage increase will create expected inflation. In fact, the wage increase will have an impact on inflation not from the actual scale, but the problem lies in the expectation factor.
Observing from previous adjustments, Mr. Binh mentioned that there was a phenomenon of "following the flow", "when the water rises, the duckweed rises", even when wages had not yet increased, prices were pushed up.
According to Mr. Binh, choosing to increase wages from July 1 (mid-year) will basically reduce the pressure to increase compared to the peak quarters in terms of prices such as the beginning or end of the year. For goods whose prices are controlled by the State, it is possible to intervene by temporarily suspending the increase to reduce the added pressure on inflation.
"As for goods whose prices are determined by the market, it is necessary to have policy communication solutions to reduce inflation expectations. It is not possible to increase wages and prices accordingly," said Mr. Binh. Specifically, it is necessary to propagate and communicate so that businesses and business households understand that in the context of a difficult economy and weak demand, increases will affect purchasing power.
Ms. Tran Thi Khanh Hien - Director of Analysis at MB Securities (MBS) - noted that the salary increase took place in the context of rising inflation since the beginning of the year, potentially creating great pressure in the third quarter.
According to the General Statistics Office, the Consumer Price Index (CPI) in May 2024 increased by 0.05% compared to the previous month and 4.4% compared to the same period last year. MBS experts commented that the increase in pork prices and the appearance of heat waves pushed up electricity prices and increased CPI during the month.
On average, in the first 5 months of 2024, the CPI increased by 4.03% compared to the same period last year, core inflation increased by 2.7%. CPI developments have shown an upward trend since the beginning of this year and are approaching the 4.5% target set by the Government, Ms. Hien commented.
Not to mention, according to Ms. Hien, transportation costs and airfares have also increased due to the recovery in tourism demand, which has had a significant impact on domestic inflation. Exchange rate pressure has not shown any signs of cooling down, which has increased the cost of importing goods, raw materials and fuel.
In fact, before the wage increase, the price level was under great pressure as businesses had to pay more input costs. "The production cost increased at the fastest rate in nearly two years, leading to an increase in selling prices, which could affect market demand in the coming months," MBS experts commented.
Workers want a raise but are afraid that a small increase in salary will cause prices to increase accordingly - Photo: PHAM NHUNG
Increased control
Mr. Le Duy Binh emphasized that it is necessary to clarify that from July 1, the basic salary increase from 1.8 million VND to 2.34 million VND (30%) will be applied to all cadres, civil servants, and armed forces.
"The number of officials receiving state salaries only accounts for a few percent of the population, and is not large enough to create real pressure to increase prices. If there is any pressure, it is mostly expected. This information needs to be clarified so that service and product providers can consider before deciding to raise prices," said Mr. Binh.
Mr. Binh also proposed that state management agencies need to increase inspection and supervision to promptly detect violations of competition law and illegal price increases that affect the market.
Many National Assembly delegates and experts also proposed that there should be control measures to avoid the situation of "splashing water" according to salary.
Delegate Hoang Anh Cong - Deputy Head of the Petition Committee of the National Assembly Standing Committee - said that increasing wages brings many benefits to workers, but the Government and agencies also need to have drastic solutions to direct ministries, branches and localities to control prices and stabilize the macro economy.
Specifically, it is necessary to do a good job of inspecting and checking the price listing process, including checking the price formation factors, not allowing salary increases to lead to unreasonable price increases that would lose the meaning of the salary increase, affecting the lives of workers. In particular, it is necessary to inspect and control, especially with essential food items, price listing at traditional markets...
Sharing the same view, delegate Vu Tien Loc - member of the National Assembly's Economic Committee - said that the information about the proposal to increase the basic salary from July 1 to VND2.34 million is a joy for any worker. However, in reality, for many years, before each salary increase, there has been a situation of goods "splashing" according to the salary, making workers less happy and more worried, although everyone wants to be able to live on their own salary.
In fact, the Government and the Prime Minister have had many drastic solutions in recent times to resolve this situation.
Therefore, it is necessary to continue to implement well, in which the authorities need to step up the implementation and supervision of price declaration measures, public price posting, and price information. Organize inspections to check compliance with price laws, and resolutely and strictly handle violations of price laws.
In addition, continue to implement a proactive, flexible, timely and effective monetary policy; coordinate synchronously, closely and harmoniously with fiscal policy and other macroeconomic policies.
Only when commodity prices are controlled, in other words, only when the situation of "salaries have not increased, prices have increased" and "prices increase according to wages" is limited, can the purpose of increasing wages for workers be fully realized.
Referring to the solution to control and manage prices when the basic salary will increase on July 1, Mr. Nguyen Duc Chi - Deputy Minister of Finance - said that the Government proactively manages the prices of State-managed goods based on market signals to control inflation, along with solutions to inspect and check compliance with the law on prices, which have been effective, stabilizing prices, aiming at the set goals.
Inflationary pressure
According to data from WiGroup - a unit specializing in providing corporate financial data, raw material costs account for more than 54% of total production and business costs of enterprises in the first quarter of 2024. This is the highest level in the past four quarters. In the fourth quarter of last year, this cost only accounted for 48%. The data is compiled from more than 1,000 financial reports of listed enterprises.
Mr. Le Duy Binh also said that the inflationary pressure coming from the demand side is not large but mainly comes from the supply side, when production costs increase. This needs to be closely monitored to proactively have solutions to manage prices.
Source: https://tuoitre.vn/lam-the-nao-ngan-luong-chua-tang-gia-da-tang-20240622230549062.htm
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