Inflation is under control.

Việt Nam•15/01/2024

The global commodity market has just experienced a volatile year influenced by economic, political , and social factors. Global inflation has shown a downward trend since the beginning of the year but remains high in many countries. In this context, the National Assembly adjusted the average consumer price index (CPI) growth rate for 2023 to approximately 4.5%, higher than the 4% of previous years.

Consumers shop at Fujimart supermarket in Hanoi . (Photo by TUỆ NGHI)

Due to Vietnam's high degree of economic openness, the prices of some essential goods domestically have increased in line with world prices, creating many difficulties for price management and putting significant inflationary pressure on the country.

In January 2023, the CPI increased by 4.89% year-on-year, but then gradually decreased. By June 2023, the increase had fallen to only 2%, with the average inflation rate for the whole year 2023 at 3.25%, meeting the target set by the National Assembly.

Lessons in success

This result is a bright spot for the economy amidst significant fluctuations in the global commodity market. Ms. Nguyen Thu Oanh, Director of Price Statistics Department, General Statistics Office, stated that this achievement is thanks to the Government, ministries, and localities actively and effectively implementing numerous solutions such as: reducing lending interest rates, stabilizing the foreign exchange market; promoting the disbursement of public investment capital; implementing credit packages to support various sectors; reducing value-added tax on some groups of goods and services from 10% to 8% from July 1, 2023; reducing environmental tax on aviation fuel; exempting, reducing, and extending taxes, fees, and land use fees to support businesses; extending visas for tourists; resolving difficulties and obstacles in the corporate bond and real estate markets; and paying attention to social welfare. Accordingly, the market for essential goods has not experienced unusual fluctuations, and supply is ensured.

"To proactively respond to the challenges posed by rising inflationary pressures, the Government has decisively directed ministries, sectors, and localities to implement synchronized solutions to stabilize prices and limit negative impacts on socio-economic development, thereby helping to curb inflation throughout the year."

"In addition, the prices of some commodities have decreased in line with world prices, such as the average price of gasoline and diesel in 2023 decreasing by 11.02% compared to 2022, and the price of gas decreasing by 6.94%, which also contributed to reducing overall inflationary pressure," Ms. Nguyen Thu Oanh shared.

The government has decisively directed ministries, sectors, and localities to implement synchronized solutions to stabilize prices and limit negative impacts on socio-economic development, thereby helping to curb inflation throughout the year. In addition, the price of some commodities decreased in line with world prices, such as the average price of gasoline and diesel in 2023 decreasing by 11.02% compared to 2022, and the price of gas decreasing by 6.94%, which also contributed to reducing overall inflationary pressure.

Ms. Nguyen Thu Oanh, Director of Price Statistics Department, General Statistics Office

Notably, effective inflation control has created room for Vietnam to maintain a monetary policy stance that supports economic recovery and development.

While central banks around the world continue to maintain tight monetary policies to control inflation, the State Bank of Vietnam has decided to loosen monetary policy through four reductions in the policy interest rate within just three months.

Interest rate adjustments were implemented from March to June 2023, with reductions of 0.5-2% per year, aiming to enable commercial banks to lower lending rates and support individuals and businesses in increasing their access to capital.

Inflationary pressure in 2024 is not expected to be too high.

Regarding the outlook for 2024, Ms. Nguyen Thu Oanh stated that the inflationary pressure in 2024 is not expected to be too significant.

Factors that could impact inflation include: high global input material prices and a strengthening US dollar, which will affect costs and prices, putting pressure on businesses and consequently driving up the prices of domestic consumer goods.

In addition, the implementation of price adjustments for state-managed services and the possibility of Vietnam Electricity Group (EVN) continuing to increase electricity prices due to rising input costs will contribute to an increase in the CPI.

In 2024, there will also be a salary reform and an increase in the regional minimum wage from July 2024, which will also lead to an increase in the prices of consumer goods and services. At the same time, government support programs for economic recovery, public investment disbursement, and tourism services are also expected to put pressure on the overall price level in the coming period.

However, alongside factors that could put pressure on inflation, there are also factors that could help reduce pressure on the price level, such as support for reducing environmental taxes on gasoline and diesel, and the continued reduction of VAT in 2024...

According to economist Dinh Trong Thinh, inflation in 2024 is trending more favorably. He predicts that if oil prices and raw material supplies continue to rise, inflation in major economies will remain high, and the global economy will recover slowly. However, if domestic businesses can take advantage of opportunities from free trade agreements, Vietnam's economy could grow by 5.5-6.5%, potentially keeping inflation in the range of 3.2-3.5%.

In the higher-than-expected scenario, where economic growth is supported by both domestic and international factors, the average CPI for 2024 is projected to range from 3.5% to 3.8%.

To control inflation in 2024 and achieve the target set by the National Assembly, the General Statistics Office recommends that the Government, ministries, sectors, and localities closely monitor price and inflation developments worldwide, promptly warn of risks affecting prices and inflation in Vietnam, and take appropriate response measures to ensure supply and stabilize domestic prices; ensure smooth supply, circulation, and distribution of goods and services, especially petroleum and strategic commodities; closely monitor price developments of essential goods to implement appropriate management solutions and proactively prepare supplies for the end of the year to limit price increases.

Building on the achievements, the Government needs to continue to manage monetary policy proactively, flexibly, and cautiously, coordinating closely with fiscal policy and other macroeconomic policies to control inflation according to the set target.

Adjusting the prices of state-managed services to accurately reflect all cost components in healthcare and education services will significantly impact the consumer price index in 2024. From the beginning of the year, ministries, sectors, and localities need to develop plans, calculate the appropriate dosage and timing for adjusting prices of state-managed goods and services to align with inflation control goals, and promptly formulate plans and roadmaps for price adjustments, avoiding a reactive approach in policy coordination.

(Source: General Statistics Office)

By PHUONG ANH/Nhan Dan Online Newspaper

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