Inflation eroding people’s optimism

The continued goods price increases, plus the prediction of the high inflation rate in the whole year of 2011, have become the obsession of people.

Prices keep rising, no sign of decreases

Several days ago, the Ministry of Finance (MOF) officially announced that it does not intend to reduce the petroleum prices, even though the petroleum prices in the world market have been decreasing significantly. The ministry has also decided to raise the import tariff in order to increase the tax collection to the state budget.

As such, the expectation for the price decreases of petroleum products, one of the most important input materials in the national economy has not come true.

Experts believe that with the move, the state is striving to implement the market price mechanism in a fully-worked manner. This means that there will be fewer opportunities to slash prices once the petroleum prices are getting more and more expensive. In order to prepare for this, the price reductions will not be considered, while the State will increase the receipts and maintain the price levels.

The petroleum prices have been decreasing in the world. But predictions all say that the downward trend would not last for a long time due to the increasing consumption demand and the uncertainties in oil export regions. Therefore, the petroleum prices would not fall deeply, but it would fluctuate all the time. This also means that the domestic petroleum prices would stay firmly high.

Meanwhile, the Electricity of Vietnam (EVN) has been insisting on raising the electricity prices in order to raise capital for power generation projects. This has raised the worries among people about the possible further electricity price increases, especially when the electricity price has been floating since June 1.

Once the electricity and petroleum prices keep rising, or staying firmly high, it seems that the further price increases of goods and services is inevitable.

A report by the Ministry of Industry and Trade shows that the fertilizer price has been forecast to increase since June, due to the increasing urea price in the world market and the new Chinese policy on export tariff reductions. Once the fertilizer price increases, experts say, this would lead to the price increases of food and foodstuff, which would influence the people’s life and inflation rate.

In fact, the foodstuff prices, after a short time of standing still, have been increasing again. The pork price, for example, has increased to 130,000 dong per kilo, while chicken price has increased to 40,500 dong per kilo, the highest peak in the husbandry industry’s history, even though it is now the low season of pork consumption.

The quality of life decreasing

The high consumer price index (CPI) increases have become an obsession for Vietnamese people, who have been living together with high inflation for the last several years.

A recent survey by Nielsen shows that the confidence index of Vietnamese consumers is decreasing, while it is increasing in the remaining parts of the world. In the first quarter of 2011, the global index increased by two points to 92 points thanks to the optimism of consumers in the Middle East, North Africa and Asia Pacific. In Asia, the confidence index has increased by 10 points to the highest ever peak of 107 points, thanks to the strong economic recovery after the crisis.

Meanwhile, the confidence index of Vietnamese consumers has dropped by five points to 98 points with the worries about the price increases of food and foodstuff, petroleum and fuel.

A survey has found out that in HCM City, the rice price has increased by 20-30 percent, while pork price by 10-20 percent, and the prices of some other kinds of food by 50-60 percent.

Poor households say that they have been most influenced by the price increases of meat, fish, rice and electricity. Poor people now fear that they do not have money for healthcare services, when the medicine prices keep escalating.

The survey has also pointed out that the increasing prices have directly affected the nutrition content of people’s meals and their health. People have to struggle to survive by reducing the quality of meals and cutting down expenses on healthcare services. People have to cut down the volumes of food, purchase cheaper goods and cut down medicine. – VIR

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