More attention needed to control inflation in 2019

Monday, 2019-03-11 16:33:36
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The market witnesses new developments in inflation in need of attention. (Photo: ND)
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NDO – In addition to the positive results in socio-economic management in February and the first two months of 2019, the market witnessed new developments in inflation that are in need of attention.

In the first two months, the growth rate of the consumer price index (CPI) was lower than the same period last year, while the monetary and foreign exchange markets were stable, liquidity was good and interest rates were maintained. Foreign direct investment saw a strong increase compared to the same period in 2018. In addition, the exports and imports of goods continued to significantly rise, while the trade deficit was still within the target set by the National Assembly.

However, the price of electricity may increase up to 8.36% from the end of March under the proposal of the Ministry of Industry and Trade, which could lessen 0.22% of the country’s GDP in 2019 and increase the CPI up 0.29%.

Notably, the market recorded a continuous increase in the prices of some commodities in the first week of March alone. Specifically, gas prices increased by VND17,000 per 12kg canister from March 1. One day later, the retail prices of some petroleum products were adjusted to sharply rise with the highest level of VND1,000 per litre. Until now, African swine fever (ASF) has appeared in several localities around the country and could become a threat to the ability of re-herding as well as the prices of pork and other types of food.

In the growth scenario for this year, research agencies and organisations optimistically forecasted that the year-round inflation could be controlled below 4%. However, the task of controlling inflation will not be easier than last year due to many adverse factors such as the increase of the price of input materials for production, causing low competitiveness and profit. Natural disasters, epidemic diseases, decisions on implementing the adjustment of several essential goods (electricity, healthcare services, education and petroleum) and the ability to loosen the monetary policy for higher growth will cause a great impact on inflation control.

According to economic experts, in order to achieve the double goals of high growth and low inflation as in 2018, price management should be implemented carefully, proactively and flexibly with the smooth coordination of the ministries and agencies concerned. Regarding the prices of essential commodities, ministries, agencies and the General Statistics Office need to strongly coordinate together to calculate the appropriate level and time of adjustment in order to control the general price level as well as limit the impact of costs on production, consumption and people's lives. It is also a successful lesson from price management in 2018.

It is crucial to enhance the synchronous coordination in the management of monetary and fiscal policies and prices as well as thoroughly calculate the time of price increases for basic and essential commodities to control inflation in 2019. In addition, the relevant agencies should continue to make efforts to stabilise the macro economy, particularly interest and exchange rates.