The cost for price-sensitive products and services including foodstuffs, construction materials and freight charges edged up slightly following the April 27 petrol price hike, it said. The average listed price for one tonne of cement rose by 0.8 to 1.2 per cent in the past three weeks, while steel, coal and power prices rose by 0.23 per cent, 0.65 per cent and 0.56 per cent, respectively. Rice and sugarcane prices climbed by 0.46 per cent and 0.02 per cent, it said.

Highway transportation was reported to have marked the highest cost increase among goods and services, with a 3.58 per cent increase, higher than the 1 per cent and 1.26 per cent increases reported for waterway and railway transport, the department said. Global oil prices continued to surge over April’s highs, with crude oil trading 17.3 per cent higher at US$84.6 per barrel. Domestic petrol traders said they were losing VND400 per litre of gasoline and VND2,000 per litre of diesel they sold until prices were adjusted.

Deputy director of the Pricing Management Department, Bui Tien Thoa, said Viet Nam would continue to experience inflation due to supply and demand imbalances in the domestic market, particularly on oil and oil byproducts. However, he said he believed the country’s GDP growth rate would continue to outstrip inflation rates.

For this to happen, relevant agencies must make accurate supply and demand market forecasts, he said. The country will need to import about 250,000 to 300,000 tonnes of sugar, 600,000 tonnes of fertiliser and 12.9 million tonnes of petroleum to meet projected domestic demands, Thoa said.

The Ministry of Finance must also adopt- and closely supervise- flexible policies to stabilise prices in the domestic market to prevent potentially harmful price increases, added the deputy director. It should also urge the Government to approve a State Bank of Viet Nam proposal to permit petrol importers to borrow more than the imposed limit of 15 per cent of credit institution’s net capital to stabilise their finance standing, he concluded.

Source: Vietnam News 25/05/2006