Permanent threat of price hike

Inflation-controlling policies of the government have been working effect, helping bring down the price of many essential goods. However, uncertainties in the exchange rate policy still makes people feel unsafe, and the fear of price rising is growin

Inflation-controlling policies of the government have been working effect, helping bring down the price of many essential goods. However, uncertainties in the exchange rate policy still makes people feel unsafe, and the fear of price rising is growing bigger.

Major risk

Based on the common ground on price and prices of raw materials dominating the prices of other commodities such as electricity and gasoline, many people believe that price- increasing fever cannot be stopped. The adjusment in prices within the past one month cannot make people feel secure because the price of electricity, petroleum and transport continues to increase.

Although for a few days the world oil prices have tended to go down, according to experts, the price of this commodity will most likely go up drastically in the coming time. Specifically, the monthly average price of WTI crude oil in May 2011 was US$101.33 / barrel, which is 7.92 percent lower than it was over the same period of the previous month but higher than the same period in 2010 which was 36.38 percent. Thus, in the short term, oil prices would probably stabilize and reduce.

However, this trend will not get the long term because there are a number of factors unfavorable for world oil prices such as the increase in demand and the instability in many parts of the world mining exports. Thus, world oil price is difficult to decrease sharply and it will constantly fluctuate. In particular, due to the adverse impact from the world economy, in the upcoming time, this product still contains a number of factors that can push its price up. And perhaps as an inevitable, the increase in world oil prices will force the domestic prices to rise.

Meanwhile, EVN has recently made signs of demanding higher electricity prices to raise capital for developing power. Earlier, the Ministry of Trade and Industry also said that many elements of the electrical input are fluctuating pressure on prices. This led to concerns about the possibility of higher prices because electricity prices have been adjusted to market prices.

The increase in electricity and gasoline prices in the early year is considered to be the cause of the rise in prices of many other essential commodities. If these items do not have a specific mechanism for their development, the risk of further price increases is unavoidable.

There are also a variety of other items on the rally. Medicines in May are stable, but there are adjustments to increase prices of the imports. The Administration of cost identified that in the future, the price of a small number of foreign and domestic drugs can increase with a narrow margin as businesses continue to adjust prices of some drugs due to the impact of input elements. The increase in price is due to an adjustment of prices under the impact of costs; and this results in the formation of a new base of drug. Fertilizer is also expected to fluctuate slightly.

Awaiting

Since people have experienced many hardships due to price increases, the risk of continued price increases will make them more miserable. Rising prices ofr electricity, petrol and essential goods actually haunt Vietnamese consumers.

A recent survey by Nielsen market research firm shows that consumer confidence is gradually declining in while significantly improved in the world and especially in the Asia Pacific region. In the first quarter, the global index of consumer confidence rose 2 points to 92 points, thanks to the optimism of consumers in the Middle East, North Africa and Asia ; the index of consumer confidence rose 10 points to the highest so far 107 points, thanks to strong economic recovery after the degradation.

In contrast with the positive developments in the region, the index of consumer confidence fell five points in down to 98 points. Optimism of the Vietnamese goes down due to consumer concerns about the country’s economic situation today. Top concern is their food prices, then the petroleum, electricity and fuel. Looking for the next 12 months, the optimism of consumers was lower than last year. 67 percent of Vietnamese respondents said that after spending for necessities, they spent all for their savings.

Meanwhile, a survey on the impact of price fluctuations to the people of Oxfam and Ac-tinoAid shows that the price increases beginning in 2011 although have not yet create d extreme effects but have reduced purchasing power, reduced quality of life, exacerbating the inherent difficulties of the group surveyed in urban areas, especially the poor, the subject of social protection and migrant workers.

For the poor, rising prices increase the adverse effects to health, nutrition and their access to basic services. For immigrant groups, prices exacerbated the difficulty of their living expenses. For groups of migrant workers, this increases the tension in labor relations and affects the stability of occupation. Price increases are also likely to cause adverse effects to the lack of social capital of the native poor and immigrants.

Rising prices makes it difficult for the whole society but the most vulnerable groups are the poor, the employees and they should be supported, sustained by an overall social security system which has a long-term view. Unfortunately, it is lacking while the price constantly increases

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