The
consumer price index (CPI) of April slightly inches up 0.05% against March due
to high inventories as a result of shrinking purchasing power.
Deflation will likely occur, thus enterprises and
consumers are expecting management agencies to take measures to stimulate
demand, said economic experts.
Economist Vu Dinh Anh told that the CPI growth of
0.05% announced by the General Statistics Office accurately reflected the
actual situation.
Despite two consecutive fuel price hikes in March
and April, prices of commodities do not rise due to the high volume of unsold
products when consumption drops strongly.
“The cause of inflation in Vietnam is now the
aggregate demand decline, not goods price increase,” said Anh.
Sharing this view, economist Ngo Tri Long said CPI
changes in March and April this year are different from what happened in the
previous years. Goods prices in the recent two months barely inch up despite
fuel price spikes, completely opposite to 2008, when fuel prices surged
sharply, pushing up CPI.
He explained the context this year is unlike that in
2008, with the monetary tightening policy of the Government and, more
importantly, the dwindling purchasing power leading to high inventories and
production stagnation.
Given the April CPI, the country’s target to
restrain inflation at the single-digit level this year is to be achieved. Anh
said CPI growth of the whole year could even stand at only 5-6%.
However, if that was the case, it would pose risks
of deflation, which is more difficult to handle than inflation.
Experts agreed that enterprises are now under the
biggest pressure as they are struggling with both input and output problems.
Whereas input costs and lending rates stay at high, consumption slows down, resulting
in mounting stock of unsold goods.
Anh stressed it would be dangerous if the output
problem was not remedied. Enterprises are looking forward to the demand
stimulating policies from the Government.
The point is how to lower lending rates so that
enterprises can access capital and maintain production, said Long. In addition,
tax reduction and measures to improve the financial conditions of businesses
and consumers are necessary to stimulate demand.
* Vietnam’s consumer price index (CPI) this month
inched up by a mere 0.05% from the previous month, according to the General
Statistics Office.
The price indexes of three groups in the commodity
basket even fell compared to last month, with the food and catering services
group down 0.8%, the housing and building materials group falling 0.44% and the
post and telecom group easing 0.01%.
The highest CPI increase of 2.67% from last month
was seen in the transport group. However, this increase was still lower than
the average CPI of 8.19% last April.
Meanwhile, the indexes of other groups were higher
than the average with a rise ranging from 0.2% to 0.56%.
The education group had a rise of 1.63% compared to
last month, and this group also had the highest year-on-year rise of 17.89%.
The overall CPI in the first four months went up by
14.57% from the same period last year.
According to experts, the increase of 0.05% in CPI
is the slightest rise in the past 21 months despite the strong increase in fuel
prices.
Compared to the end of last year, CPI only rose by
2.6%, which showed that inflation is partly curbed.
However, economic experts are still concerned over
the production stagnation. The decline in the index of industrial production,
and the export volume of major products also dropped strongly while the retail
sales of goods and services in the first quarter were not high.
Previously, Hanoi City’s CPI in April was reported
to drop by 0.03% month-on-month and rise by 9.52% year-on-year, marking the
first time after two years Hanoi’s CPI declined from the previous month.
Saigon Times
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