January 20, 2018 10:14

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2018 inflation will be under pressure

09:38 | 11/01/2018

VCN - Most of the economic experts at the conference on movement of market and prices in Vietnam in 2017, and forecasts for 2018, on 9th January 2018 in Hanoi all believed that 2018 inflation would be under pressure.

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Quang cảnh hội thảo.

Ensuring the objective

According to the report of the Department of Price Management under the Ministry of Finance, inflation in 2017 reached the target set by the National Assembly with a rate of below 4%, market supply and demand were ensured. The price regulatory under the market mechanism is governed by the State, the market price was stabilized, contributing to reducing costs for enterprises, supporting the objective of economic growth. However, experts at the conference said that there were still many factors that pushed up market prices, such as the fluctuation in price of goods in the world market; lack of initiative in market forecast; inefficiency of price stabilization and market price control of market prices in areas of storms and floods in some central provinces.

Forecasts for market prices in 2018, the economic experts said that it was difficult to haveabig shot to push up a price surge to create price fever. Therefore, the price level this year would be stable, even tend to decrease slightly.

To prove this, the report of the Department of Price Management shows that the supply of essential goods is increasing due to increasing domestic production capacity together with the signing of free trade agreements by the Government. This will help the people to buy domestically produced goods and imported goods at competitive prices.

Although there is some pressure on increase in prices due to the fact that commodities used for calculation of core inflation accounted for 60% of the commodity basket of CPI calculation in 2017. It is forecasted that in 2018, the core inflation willstill becontrolled in the rangeof1.6 – 1.8%. In addition, the exchange rate and interest rates will still be stable, helping to reduce costs for businesses.

In addition, because core inflation is most often calculated using the consumer price index (CPI), the selection of appropriate time and price revision of commodities managed by the State plays an important role in controlling inflation at about 4% in accordance with the National Assembly's target.

Complicated and unpredictable

Regarding prices in 2018, Mr. Nguyen Tien Thoa, Vice Chairman and general secretary of Vietnam Appraisal Association, said that the market still has potential negative factors to the objective of inflation control. They are credit expansion, exchange rates, electricity price revision, the implementation of minimum wage roadmap, the market price roadmap for goods and services of which pricesaredefined by the State, and the consequences of natural disasters and epidemic that can be complicated and unpredictable.

With the experience in price revision in 2017, Mr. Thoa recommended that in order to control CPI, it must continue to address the original cause of inflation, which is restructuring of the economy and innovation of the growth model. At the same time, raising productivity, quality, efficiency and competitiveness and stabilizing the macro economy.

In addition, deploying effectively and synchronously some major regulatory solutions right from the beginning of the year. That is, always ensuring sufficient resources to meet consumer demand (both consumption for production and consumption for life), in all circumstances, in all regions, and in all times of the year.

The economic expert, Associate Professor Ngo Tri Long said that in 2018, market prices will be affected by many factors such as epidemic, weather and climate. Thus,maintaining inflation at 4%,is a challenge, when solutions to push up the growth in 2017 such as accelerating investment, losing credit balance growth, etc., may have alate affect on the CPI movement in the next year.

2018 inflation will be under pressure mainly from the upward revision of prices of public services and food. Public service prices in 2018 will continue to be revised according to the 2016-2020 price increase roadmap, which is predicted to contribute to overall inflation, equivalent to about 2- 2.25%.

According to Mr. Ngo Tri Long, in order to achieve the target that the speed of increasing CPI averages 4%, the price management and price stabilization should be further strengthened to control inflation, ensure macroeconomic stability and closely monitor the movement of CPI to take timely revision.

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At the same time, the CPI regulatory must closely follow and support the growth objective in order to prevent expected inflation or latent inflation in later years. The measure of price and price levels for goods and services priced by the State must be strictly controlledand the price declaration of enterprises for goods subject to price stability and declaration. All goods and service priced by the State in 2018 should be revised in accordance with each period, avoiding the revision in the hot period, that caneasily cause achain reaction and fluctuations.

By Hong Van/ Huyen Trang