Price rises all round electricity set to become more expensive

Though electricity price will only increase as of March 1, the prices of many goods and services have begun escalating already.

Dau tu chung khoan reported that the price of food at traditional markets were very high on February 25, especially the price of vegetables and seafood.

However, the newspaper pointed out that sellers pushed up sale prices up just because they heard about the electricity price increases commencing from March 1, not because of short supply. Prior to that, the petrol prices were raised by 590 dong per liter, triggering worries about a new wave of prices increases.

The price of dairy products, an essential products, has also increased. Vinamilk has announced price increase of 8 percent for its products. Friesland Campina Vietnam has also raised prices of its products by 8-10 percent. Other dairy producers and distributors including Abbott and Hancofood raised sale prices in January 2010 already.

Analysts say that with the dong/dollar exchange rate increase and petrol and electricity price increases, the price increases of other goods and services are unavoidable, because petrol and electricity are raw materials of industrial production.

Nguyen Hac Thuy, deputy chairman of the Vietnam Fertilizer Association, has predicted that the fertilizer prices may increase by 3-5 percent.

However, Government agencies have vowed not to let the goods and services, which do not have relations with petrol and electricity price, to increase in price.

“Any attempts to overly raise the prices of goods and services, reasoning the electricity price increase, must be condemned,” said Bui Xuan Khu, deputy Minister of Industry and Trade.

Vu Vinh Phu, chairman of the Hanoi Supermarkets’ Association, also said that it is ridiculous that producers of consumer goods, which are in no way influenced by the exchange rate or electricity price adjustment, also raise sale prices. He has urged government agencies to create a way of punishing those who take unfair advantage of the electricity price increase, to push up sale prices.

Dr Nguyen Duc Thanh, director of the Centre for Economic and Policy Research (CEPR) under the Hanoi National University, while warning about the new price increases, has urged the Government to pay attention to using monetary and fiscal policies to curb price increases.

Thanh said that the Government should not try to curb the inflation rate at below seven percent at any cost, or Vietnam will have to pay a heavy price for this, since many sectors such as securities or real estate markets may go frozen. However, if the inflation rate goes overly at above 10 percent, this will make the local currency weakened and threaten the national economy.

Dr Vu Thanh Tu Anh, a senior economist, believes that the higher electricity price will not much affect the competitiveness of domestically made products on the domestic market, because the prices of imports have also increased due to the dong/dollar exchange rate adjustment.

VietNamNet/DTCK, CAND

Tags: Vietnam price, Vietnam prices