5% increase in electricity prices may lead to 0.369% rise in CPI

The current 5% increase in the electricity prices will lead the consumer price index (CPI) to accelerate by 0.369%, the Minister of Finance Vuong Dinh Hue said in an online conversation this afternoon.

The electricity price hike will affect CPI increase in two rounds, the minister said when answering the question of how the electricity price increase will affect CPI.

Firstly, rise in electricity prices will increase the direct costs. According to statistics, if electricity prices increase by 1% will lead the direct costs to increase by 0.0246%.

Secondly, electricity price hike will affect other commodities. If electricity prices increase 1%, CPI will roughly rise by 0.0492%.

Recently, electricity prices increased by 5% from Dec 20th 2011 will add January 2012 CPI to rise by 0.369%.

The electricity prices in 2012 will be calculated on electricity production costs and a part of Electricity Vietnam’s losses from 2011. Coal prices for electricity production in 2012 will be raised to 80% of export prices, the head of MoF said, adding that prices for electricity in 2012 will be raised in the limit, assuring 2 objectives:

The first objective: electricity, petroleum, coal and other public services can basically follow market mechanism by 2013.

The second objective: inflation will be curbed below one figure (the government targeted at 9%).

In addition, in 2012 the MoF will collaborate with the government inspectorate and state auditor to continue investigating, supervising and monitoring petroleum and electricity businesses.

Source TEI/StoxPlus

Tags: Vietnam electricity prices, Vietnam energy, Vietnam energy industry, Vietnam Energy sector