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June’s CPI not unusual, says Deputy PM
The Saigon Times Daily
Wednesday,  Jul 11, 2018,11:16 (GMT+7)

June’s CPI not unusual, says Deputy PM

The Saigon Times Daily

Deputy Prime Minister Vuong Dinh Hue speaks at the meeting on the economic situation for the first half of this year, and management orientations in the remainder of the year – PHOTO: VGP

HCMC – The headline consumer price index (CPI) in June, which rose 0.61% from a month earlier and was the highest June rise in seven years, was not unusual, Deputy Prime Minister Vuong Dinh Hue said at a meeting in Hanoi City on July 10.

Deputy PM Hue, who is also head of the Government’s Steering Committee for Price Management, chaired the meeting on the economic situation for the first half of this year, and management orientations in the remainder of the year, the Government news website reported.

Nguyen Anh Tuan, head of the Price Management Department under the Finance Ministry, said the CPI between January and June was quite close to previous forecasts by relevant agencies.

Factors which caused increases in prices in the six-month period mainly came from market factors. There was almost no new price hike factor from the price management of the Government, according to Tuan.

Given signs of rising inflation, the Government has decided not to raise electricity prices this year, and stabilized the prices of State-controlled products in June.

Besides, the Government will possibly lower the prices of medicines and medical materials through auctions, and will take necessary measures to stabilize products whose prices are likely to be chased up.

Deputy PM Vuong Dinh Hue said June’s CPI at 0.61% was not unusual. With rising pork prices excluded, the inflation could have grown by only 0.27% that month, which could be seen as the lowest monthly CPI increase so far.

Deputy Governor of the State Bank of Vietnam Nguyen Thi Hong told the participants at the meeting that the base interest rate is as low as 1.35% while the credit growth of this year is estimated at 17%, lower than the target of 2017. Credit had grown by 7.88% as of late June, compared with 9.06% a year earlier.

She added the country gained a trade surplus of US$2.7 billion, with the balance of payment surplus at up to US$9 billion, and had stable interest rates. Therefore, they are not factors behind the abnormal hike in exchange rates.

The Price Management Department and the General Statistics Office at the meeting suggested price management scenarios for the rest of the year.

In the first scenario, the all-year inflation could range from 3.7% to 3.88%. This month’s inflation could decline by 0.2% against June’s, as prices in healthcare services could decrease by 0.34% while fuel prices without any adjustments could fall by 1%. However, prices of pork, domestic water, electricity, gas, and out-of-home dining services could rise.

Possible hikes in pork, fuel, gas, education services, environmental protection tax in oil products, as well as impacts of natural disasters between August and December could contribute to rises in inflation, compared with those in previous months.

Having taken these factors into account, the all-year average inflation of 2018 could grow by 3.9-4% compared with that of the previous year.

Solutions to curb inflation

Deputy Minister of Industry and Trade Do Thang Hai said the possible increase in the environmental protection tax on gasoline should follow a road map, with the tax rising by VND500 per liter for the first time instead of a lump sum of VND1,000.

Deputy PM Hue supported the proposal, saying that the fuel price stabilization fund should be effectively used to reduce gasoline prices. The trade ministry was asked to come up with a tariff reduction plan on biofuel as well.

Meanwhile, Deputy Minister of Transport Le Dinh Tho stated that toll fees at build-operate-transfer infrastructure projects are now kept reasonable after the ministry has reviewed and verified their investment costs.

He added the Transport Ministry has asked the Civil Aviation Authority of Vietnam to keep air fares reasonable despite rising prices of petroleum-based products on global markets and exchange rate fluctuations. In case of high fuel prices, the ministry would ask local airlines to increase their fares slightly.

Regarding the issue, Deputy PM Hue asked the ministry not to revise up air fares at peak times, and to incorporate the adjustments of air and bus fares into its price management plan.

The deputy PM also urged the Ministry of Agriculture and Rural Development to be cautious about rampant pig farming, as farmers could put themselves at a disadvantage. In addition, the ministry was told to make a report about the management of pork supply and demand for the rest of this year.

Hue also asked the Health Ministry and the Vietnam Social Security to continue putting up medicines and medical materials for auction in a bid to reduce their selling prices.

He also asked the central bank to pursue monetary, fiscal and other macro policies flexibly to curb inflation in line with the National Assembly’s full-year target of 4%; and avoid huge pressures on exchange rates.

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