Experts have forecast that the consumer price index (CPI) will rise by 8.4% in 2007.

The inflation rate reached 24.5% in 2004-2006, which means that the local currency lost its value by ¼. What are solutions to curb inflation and keep the inflation below the GDP growth rate? Experts talked about this at a workshop on market prices in July and forecasts for the remaining months of the year held in Hanoi two days ago.

Nguyen Duc Thang, Deputy Head of the Trade, Service and Price Statistics Department under the General Statistics Office (GSO): Prices will decrease in October

The CPI in July 2007 increased by 0.94%, raising the CPI growth rate for the first seven months of the year to 6.19%. The scenario of a high inflation rate for 2007 has become a very real possibility.

GSO has been asked to give explanations on the method of calculating CPI. We can say that the method we use is the best one, which comes in line with international practice. The figures released by GSO are being used by international institutions like IMF, WB, ADB in their researches.

I don’t think that there will be price adjustments in August, though the decision on cutting tax came into effect on August 8. It may happen that the prices will decrease in October, when the new imports with new tax rates are available on the market. However, the price decreases will not be big.

It is necessary to focus on stabilising food and foodstuff prices. If we can keep the CPI growth rates for the last five months of 2007 at the same rates of the last year’s five months, the CPI for 2007 as a whole would increase by 8.4%.

Hoang Tho Xuan, Head of the Domestic Market Policy Department under the Ministry of Industry and Trade: It is necessary to form up big distribution networks

The work of stabilising the market will require big distributors. We need to design a mechanism, set up the legal framework in order to pave the way for the formation of big distribution networks, especially distributors of key products like food and foodstuffs.

The Ministries of Finance and Industry and Trade are taking inspection tours of steel, gas and dairy companies to learn about the actual production costs, in order to have suitable macroeconomic management solutions.

I have to acknowledge that we still cannot find solutions to curb the food and foodstuff price increases. I think that it is necessary to have a powerful distribution channel which can help bring goods from producers to consumers.

I think the CPI growth rate for 2007 will be 8.3-8.4%.

Vo Tri Thanh, Director of the Department for Trade Policy and International Integration Department under the Central Institute for Economic Management:

The story of high inflation will not be seen this year only, but will continue in the next years. We have to settle a lot of short-term and long-term things, including the monetary policies, state budget and market interference.

Regarding the market interference, we have to draw necessary lessons from the story on regulating petrol price. In May 2007, when the situation was ‘hot’ in Iran, and the elections for the National Assembly were taking place, the Ministry of Trade decided to float petrol prices, giving more autonomy to petrol distributors in defining petrol retail prices.

We can float petrol prices only when there are enough necessary conditions: enterprises can rival each other in healthy competition and there is a good supervision and dispute settlement mechanism.

Source: Tien phong.