Controlling inflation in the context of rising consumer prices

Appropriate inflation level to support growth

According to the second quarter report of the General Statistics Office (GSO), the Consumer Price Index (CPI) in the second quarter of 2024 increased by 4.39% over the same period. The reason, according to GSO, is due to the increase in prices of essential goods such as the Price Index of food and catering services; housing, electricity, water, fuel and construction materials; transportation... In which, the highest increase was in theeducation group with an increase of 8.15%; followed by the medicine and medical services group with an increase of 7.63%.

Overall, the average CPI in the first 6 months of 2024 increased by 4.08% over the same period in 2023. Ms. Nguyen Thu Oanh - Director of the Price Statistics Department (GSO) assessed that this is "an appropriate inflation rate to support economic growth and is within the target set by the National Assembly for this year (from 4 - 4.5%)". At the same time, inflation in the first 6 months of the year is also following the trend of the price scenario that GSO has built since the beginning of the year. "To achieve the target of 4.5% for the whole year of 2024, the room for the average in the last 6 months of the year is 4.9% over the same period last year" - Ms. Oanh commented.

In addition, according to the representative of the General Statistics Office, there are some favorable factors for controlling inflation in the coming time. Specifically, global inflation is continuing to cool down, helping Vietnam reduce pressure from the inflationary import channel. Policies on tax exemption, reduction, and extension for land use fees in the last 6 months of the year contribute to reducing production costs and reducing prices of goods and consumer services. With abundant food and foodstuff sources, Vietnam avoids risks and challenges in food security that are likely to occur in many countries around the world .

In addition, the experience in price management, the strong direction and timely response of the Government will help limit the impact of price adjustment on inflation and stabilize inflation expectations. Therefore, the representative of the General Statistics Office assessed that "the possibility of achieving the inflation control target set by the National Assembly for this year is feasible".

Does wage increase affect CPI?

CPI in the second quarter as well as the first 6 months of 2024 is expected to increase. This raises concerns that this index will continue to increase, especially in the context that the National Assembly has agreed to increase the regional minimum wage and the basic salary from July 1, 2024.

In response to this concern, Ms. Nguyen Thu Oanh informed that from 2009 to July 1, 2024, the basic salary has increased by about 280%, the regional minimum wage has increased by about 480%, while the CPI has increased by about 108%. "Thus, after 15 years, the salary increase rate is much higher than the CPI increase rate. This shows that the Government always aims for the goal that salary must truly be the main source of income to ensure the lives of workers and their families, creating motivation to improve labor productivity" - Ms. Oanh commented.

The representative of the General Statistics Office assessed that the increase in wages contributes to improving people's lives, contributing to economic growth, increasing people's purchasing power, and when the supply-demand relationship changes, it will affect prices. However, if in the past prices often increased when wages increased, even when there was a policy on increasing wages, in recent years, the Government, people and the market have adapted, not being affected much, so there have been few cases of price increases when wages increase, but mainly creating inflation expectations.

To avoid the phenomenon of "following the flow" when wages increase, the General Statistics Office recommends a number of solutions to control the market. Accordingly, the authorities need to strengthen the implementation and supervision of price declaration, price posting, and price information disclosure measures; Organize inspections and checks on compliance with price laws and strictly handle violations. In particular, avoid adjusting prices of state-managed services such as health care services, education services, and household electricity at the same time as the wage increase on July 1, 2024, which can easily cause inflationary expectations and cause prices of other goods and services to increase accordingly.

In addition, there are other proactive activities that can make the wage increase not affect the price increase, thereby having less impact on the CPI, such as calling on businesses to participate in the market stabilization program, especially large-scale businesses, reputable brands, high market share and the hub of supply chains; Encouraging shopping malls and supermarkets to organize promotional campaigns to stimulate consumption at the same time as the wage increase. At the same time, ministries, branches and localities must fully prepare essential consumer goods such as food and foodstuffs to ensure timely response to people's needs.

Forecast to achieve growth target in 2024

According to the announcement of the General Statistics Office, the gross domestic product (GDP) in the second quarter of 2024 grew positively, with an estimated growth rate of 6.93% over the same period last year. Overall, GDP in the first 6 months of 2024 increased by 6.42%.

In particular, the industrial and construction sector recovered positively, the industry maintained growth momentum, some key industrial products increased quite well, meeting the demand for new orders of enterprises; Especially in the first 6 months of 2024, imports increased again, ensuring the supply of raw materials, fuels and machinery and equipment for domestic production, the agricultural, forestry, fishery and service sectors remained stable.

However, some industries still face many difficulties and have not recovered, such as the production of other means of transport decreased by 3%; the production of non-metallic mineral products decreased by 1.7%.

According to the General Statistics Office, the economic growth rate in the first 6 months of the year reached 6.42%, higher than the upper limit growth target set in Resolution 01 (5.5 - 6%), which is a positive sign for the growth target for the whole year 2024. This result shows the effectiveness of the efforts, close and timely management of policies of the Government, State, Ministries, and branches and the efforts and determination of localities, businesses, and people on the path to economic recovery and development.

Based on developments in the world situation, domestic economic performance in the first 6 months of the year and some comments on the economic situation in the last 6 months of the year and if there are no major fluctuations, the General Statistics Office believes that it is likely that Vietnam will achieve the 2024 growth target of around 6 - 6.5%.

Source: https://baophapluat.vn/kiem-soat-lam-phat-trong-boi-canh-gia-tieu-dung-tang-post517273.html