Except for the price index of the postal and telecommunications group, which decreased, the remaining 10/11 groups of goods and services increased, causing the Consumer Price Index (CPI) in April and the first 4 months of this year to increase quite strongly compared to the same period in 2023.
“With this development, the General Statistics Office has developed three inflation scenarios for this year,” said Ms. Nguyen Thu Oanh, Director of the Price Statistics Department (General Statistics Office).
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| Ms. Nguyen Thu Oanh, Director of Price Statistics Department (General Statistics Office). |
Contrary to predictions at the beginning of the year, controlling inflation this year does not seem easy, madam?
Never before has the Government's Price Management Steering Committee and relevant ministries and branches considered price control easy, even in conditions where there are many favorable factors supporting this task.
But this year, if the price movement in the first quarter was still quite stable, the CPI in the first 3 months of the year increased by only 3.77%, then in April 2024, the CPI increased by 4.4% over the same period last year with 10 groups of goods and services increasing in price, causing the CPI in the first 4 months of this year to increase by 3.93%. Prices of all goods and services in the first 4 months of the year all increased, except for post and telecommunications, which decreased by 1.47%. Of which, the housing and construction materials group alone increased by 5.54%, causing the CPI to increase by 1.04%; the education group increased by 8.84%, causing the overall CPI to increase by 0.55%; the medicine and medical services group increased by 6.74%, causing the overall CPI to increase by 0.36%. These 3 groups of goods and services alone caused the CPI to increase by 1.95%.
With the above developments, what will inflation be like this year?
We have developed three scenarios for inflation this year based on the domestic market, assessing the world situation and analyzing factors affecting Vietnam's inflation in the coming time. The inflation scenarios are built through forecasting price fluctuations of groups of goods and services that greatly affect the CPI such as food, foodstuffs, electricity, gasoline, medical services, education services, etc. Accordingly, the best scenario is that this year's CPI will increase by 3.8%; the most likely scenario is an increase of 4.2% and the most negative scenario is an increase of 4.5%.
In the first scenario, CPI peaks in April and then gradually declines.
Second scenario, CPI peaks in May and gradually declines.
The third scenario depends on many factors. In particular, we are more inclined towards the second scenario, because during the CPI calculation cycle (from 25 months before to 25 months after), due to the 5-day holiday of April 30 and May 1, the demand for travel, tourism, entertainment and recreation increases sharply, so the prices of goods and services also increase sharply, in May and June will "cool down".
Of course, every scenario is calculated and built by humans, so the level of accuracy depends on many objective and subjective factors.
In controlling inflation, objective factors from outside have a huge impact, beyond the will of state management agencies, don't you think so?
Yes. The external impacts on Vietnam's economic activities are huge. In the world, inflation is showing signs of cooling down thanks to central banks implementing a prolonged monetary tightening policy. In its most recent meeting, the US Federal Reserve (Fed) decided to keep interest rates unchanged at 5.25 - 5.5% due to concerns about the potential risk of inflation returning.
It is also difficult to predict when the Fed and central banks around the world will reduce the current very high interest rates, when conflicts of interest and strategic competition between major countries and major economies are increasingly fierce. Economic and political instability and strategic competition always have the potential to cause disruptions in the transportation of goods, increasing the costs of production, transportation, logistics, food security, energy and putting pressure on the prices of crude oil, raw materials, fuels and input materials for global production activities.
In the first 4 months of 2024, Vietnam imported 115.24 billion USD worth of goods. Of which, machinery, equipment, tools, and spare parts accounted for 45.7%; raw materials, fuels, and materials accounted for 48.3%. Therefore, when the world market fluctuates, transportation and logistics face difficulties, it will greatly affect Vietnam's production, business, and inflation activities.
According to you, how does the Fed's current high interest rate impact Vietnam's inflation?
High interest rates and less money pumped into the market increase the value of VND compared to other currencies. The Fed keeps interest rates high, causing the VND/USD exchange rate to increase, making it more expensive for businesses to buy USD to import goods. Not to mention, when businesses borrow USD to import goods, when they buy USD back to pay off the debt, they also have to bear increased costs due to the increased exchange rate. Thus, when the VND/USD exchange rate increases, it causes production costs to increase, production costs to increase, and immediately affects inflation.
The Fed has not given a specific time to loosen monetary policy and reduce interest rates, so the value of USD on the world market has increased. Specifically, as of April 25, 2024, the USD Index on the international market reached 104.95 points, up 1.4% over the previous month. Domestically, the demand for USD of enterprises importing raw materials, fuels and materials has increased, the average USD price on the free market is around 25,120 VND/USD. The USD price index in April 2024 increased by 1.2% over the previous month, increased by 3.03% over December 2023, increased by 6.51% over the same period last year; the average increase in the first 4 months of 2024 was 4.6%. This is a fairly high increase, putting great pressure on inflation control.
Unlike previous years, to control inflation this year, in addition to dealing with gasoline prices, we also have to deal with food and electricity prices, madam?
The world's climate is becoming more and more extreme, causing the prices of essential consumer goods such as rice, coffee, cocoa, sugar... to increase.
Vietnam is a rice exporting country, rice prices increase, farmers are "happy as Tet", but the world rice price increases, leading to an increase in domestic rice prices, so except for rice producers, the rest increase the cost of food, causing no small pressure on inflation because food accounts for a very large weight in the CPI index.
Vietnam's retail gasoline prices are "in sync" with world gasoline prices. Since the beginning of the year, the trend of gasoline prices increasing has been very clear due to instability in the Middle East, the Russia-Ukraine conflict, instability in the Red Sea... In the domestic market, the retail price of gasoline in April 2024 increased by 11.63% due to price adjustments from January 2024 to present, causing each liter of A95 gasoline to increase by 2,770 VND; E5 increased by 2,730 VND; diesel increased by 930 VND. The increase in gasoline has a huge impact on the CPI, because every 10% increase in gasoline prices will cause the CPI to increase by 0.36 percentage points.
The electricity industry also has to import machinery and equipment to maintain operations, invest, and reinvest; raw materials and fuels to run thermal power plants and is also affected by increases in regional minimum wages and basic salaries, so whether we like it or not, electricity prices this year will certainly continue to increase, even increase many times, which will immediately impact the CPI, because when electricity prices increase by 10%, the impact will increase the CPI by 0.33 percentage points.
With these unfavorable developments, if we can control the CPI around 4.2% this year, it will be a success.
Source: https://baodautu.vn/san-sang-cho-3-kich-ban-lam-phat-d214443.html
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