Concerns rise over price hikes

Policymakers and experts warned on Tuesday that the nation’s economic prospect in the second half of the year would be gloom with higher commodity prices and limited room for policy maneuvering.

Economist Nguyen Minh Phong said at a conference held by the Finance Ministry on Tuesday in Hanoi to review pricing issues that the consumer price index (CPI) would remain a challenge this month.

“CPI for this July would not slow down at the pace of the previous month because commodity prices continue to rise,” he asserted.

“I guess the CPI would be around 0.8-1% per month in the rest of this year,” he added. Vietnam’s CPI recorded over 16% in the first six months compared with the same period last year.

The conference was held in the context commodities prices continued to rise these days despite the Government’s efforts to tame inflation.

Nguyen Loc An, deputy director of the Domestic Market Department of the Ministry of Industry and Trade, said almost all commodities were sold at higher prices.

“The matter is that many producers are experiencing rising stockpiles but they cannot reduce prices because of high input prices,” he explained.

The General Statistics Office has recently announced that many products like beer, motorbikes, shoes and domestic feed were stocked in large volumes.

An attributed higher prices to the illicit exports to neighboring countries like China.

Economist Minh Phong added that higher prices resulted from the fact that Chinese dealers were collecting goods for export to their market.

“This phenomenon is worrying because China is a populous nation and has suffered from droughts recently.”

Besides, Phong also blamed the backward retail system for the situation.

Chairman of the Hanoi Supermarket Association Vu Vinh Phu shared with Phong’s view, saying there was a big gap in goods prices from the production line to the store.

“Commodity prices rise because of too many factors. I know some drivers have to pay at least VND500,000 in extra costs for each short trip from Thai Binh to Hanoi,” he said.

“It would take decades to solve the situation because it has been rooted too deep in our system.”

He also said the situation hit poor people so hard.

“According to the General Statistics Office, up to 60% of households in Vietnam spend up to 60% of their income on foods. This means that the majority of our population is still poor and affected by inflation,” Phu said.

Head of the Price Management Department of the Ministry of Finance Nguyen Tien Thoa blamed high inflation on open monetary and fiscal policies over the past decade.

Thoa said the domestic market would be put under greater pressure as prices of essential imports for production like gasoline, fertilizer and others would increase in international markets. He proposed the Government to be patient in implementing Resolution 11 in the rest of the year to arrest the rising inflation. – SGT

Tags: Vietnam 2011 inflation, Vietnam economic, Vietnam economy, Vietnam inflation