The impact of Typhoon Yagi and floods in the Central provinces, which caused food prices to increase, was a factor in the increase in the Consumer Price Index (CPI) in October and the first 10 months. However, according to Ms. Nguyen Thu Oanh, Director of the Price Statistics Department (General Statistics Office), the target of controlling inflation below 4.5% will be achieved.
The impact of Typhoon Yagi and floods in the Central provinces, which caused food prices to increase, was a factor in the increase in the Consumer Price Index (CPI) in October and the first 10 months. However, according to Ms. Nguyen Thu Oanh, Director of the Price Statistics Department (General Statistics Office), the target of controlling inflation below 4.5% will be achieved.
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| Ms. Nguyen Thu Oanh, Director of Price Statistics Department (General Statistics Office) |
Food and foodstuffs account for a large portion of the CPI basket. Madam, how have the sharp price increases of these two groups of goods due to the impact of Typhoon Yagi and floods in the Central provinces affected the CPI?
The continued increase in food prices due to the impact of storms and floods is one of the main reasons why the CPI in October 2024 increased by 0.33% compared to the previous month, increased by 2.52% compared to December 2023 and increased by 2.89% compared to the same period last year. However, the average CPI in the first 10 months of 2024 only increased by 3.78%, so the ability to control inflation below 4.5% is completely achievable.
Specifically, the price index of food and catering services in October 2024 increased by 0.55% (compared to September 2024), causing the overall CPI to increase by 0.18 percentage points. Of which, the food group increased by 0.77%, affecting an increase of 0.03 percentage points; the food group increased by 0.66%, affecting an increase of 0.14 percentage points. Compared to the same period in 2023, the CPI in October 2024 increased by 2.89%, of which the food and catering services group alone increased by 4.45%, causing the overall CPI to increase by 1.49 percentage points. However, on the contrary, the 13.54% decrease in gasoline prices alone reduced inflation by 0.14 percentage points.
On November 10, 2024, the average retail electricity price increased by 4.8% (excluding VAT), but according to calculations by the General Statistics Office, the 4.8% increase in electricity price only increased the CPI by 0.04 percentage points in the fourth quarter of this year, so it did not put pressure on inflation.
Many provinces in the Central region are struggling to cope with floods, threatening sharp increases in food prices in the last months of the year. Madam, with this unfavorable development, what will the inflation trend be like?
In contrast to 2023, the CPI in the first 5 months of 2024 (compared to the same period) tends to increase gradually and reach 4.44%. This is a time when there have been no storms or floods, the weather is very favorable. But starting in the rainy season, from June 2024 to now, inflation tends to decrease gradually, from an increase of 4.34% in June 2024, down to an increase of 2.89% in October 2024, so in the first 10 months of this year, the CPI has only increased by 3.78%.
I think that the downward inflation trend since June will continue in the last two months of the year, so the possibility of controlling inflation this year below 4.5% as set by the National Assembly is quite high, even though many areas in the Central region are suffering from floods.
Based on what factors do you confidently believe that inflation this year will be below 4.5%?
According to our calculations, if inflation hits 4.5% this year, the CPI in the fourth quarter must increase by 6.4%. This is very unlikely, because the 2024-2025 school year has already started, and tuition fees have been set by localities for the entire school year, so there will be no adjustment. Electricity prices have also increased, and according to regulations, the minimum period for adjusting the average retail electricity price is 3 months, so from now until the end of the year, electricity prices will certainly not increase. The increase in food prices in Vietnam is actually following world prices, because Vietnam is a rice exporting powerhouse, but India - also a rice exporting powerhouse - has just decided to relax rice export regulations after implementing restrictions from mid-2024, so world food prices will no longer be tense.
Inflation in the world, especially in economic centers, has cooled down and is approaching the target inflation rate (2%/year), so the European Central Bank (ECB) has continuously cut interest rates. The US Federal Reserve (Fed) has just cut its operating interest rate by 50 basis points and will likely continue to cut another 25-50 basis points this month, causing pressure on the VND exchange rate against strong currencies, especially the USD and the Euro, to decrease.
The cooling of global inflation helps Vietnam reduce pressure from the inflationary import channel, because the proportion of machinery - equipment, tools - spare parts accounts for 47.3% of total import turnover; raw materials, fuels and materials account for 46.4%. When machinery, equipment, spare parts, raw materials, materials and fuels do not increase, it greatly helps businesses reduce production costs, thereby reducing product prices.
American voters have chosen a leader for the next four years. How do you think this will impact Vietnam's inflation control?
Donald Trump's last term in office showed that he was very tough on imports from China. This term, he announced that he would continue this policy. When Chinese goods have difficulty entering the US market due to tariff barriers, they will be pushed to other markets, in which Vietnam is a large market for Chinese goods.
In the first 10 months of 2024, Vietnam imported 117.7 billion USD from China, up 31.6%; exported 50.8 billion USD to the "billion-people market", up more than 2%.
Importing raw materials, machinery, equipment, parts and spare parts from China at low prices creates conditions for enterprises to produce export goods, increase competitiveness, thereby contributing to controlling inflation. However, domestic enterprises, especially small and medium enterprises, are under increasing competitive pressure with cheap goods from China. In addition, it is necessary to control the situation of "disguised investment", where foreign enterprises are established in Vietnam, import Chinese goods and then change the origin label to export to the US as has happened before.
In general, when the US has a new Government, it will have a significant impact on Vietnam's production, business, investment, trade and inflation control activities, both favorable and unfavorable.
Effective control is undeniably contributed greatly by policies on tax, fee, charge and land rent exemption, reduction and extension, madam?
That's right. This year, according to the Ministry of Finance's estimates, the amount of exemption, reduction, and extension of taxes, land rents, and 36 fees and charges is about VND200,000 billion. This amount not only provides timely support for businesses to overcome difficulties, recover, and develop production and business, but also indirectly contributes to controlling inflation because businesses reduce production costs and financial pressure. In particular, environmental protection tax on gasoline and oil products is reduced by 50%, and registration fees for domestically produced and assembled cars are also reduced.
Therefore, the Government has directed the Ministry of Finance to study and evaluate, to consider extending policies on tax, fee, charge exemption, land rent extension, etc. to support growth, remove difficulties for production and business. Continuing to implement these financial support policies will greatly contribute to controlling inflation next year because it reduces pressure on expected inflation.
However, the pressure on inflation is not small because public investment in the last months of this year and in 2025 is very large to complete the Medium-Term Public Investment Plan. When public investment increases, it will lead to an increase in private sector investment and foreign investment. At that time, if there is not enough construction materials and accompanying equipment, the prices of these goods will increase, creating an effect of increasing the prices of many other goods. The economy is recovering strongly, leading to an increase in electricity demand for production and consumption. This is a huge pressure on controlling inflation next year and the following years, if there is not enough electricity.
Source: https://baodautu.vn/se-dat-muc-tieu-giu-lam-phat-duoi-45-d229440.html
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