Prices keep on rising

Prices of many essential goods have gone up much more than predicted earlier in the year, some by 50-100 percent over last year.
 
According to the General Statistics Office, the consumer price index (CPI) reached 8.12 percent over the last ten months and is likely reach 9 percent this year, exceeding expected gross domestic product (GDP) growth of 8.5 percent.
 
Consequently, inflation and attempts to better control it received much attention at the twelfth sitting of the National Assembly.
 
Further, the Government intensified its efforts to monitor retail prices and even forfeited trillions of Viet Nam dong by reducing tariffs.
 
But neither measure seemed to reduce inflation. In particular, consumers still haven’t benefited from the tariff cut. Why?
 
Some blame rising prices of imported goods. Importers, for example, claim that though tariffs on dairy product inputs were reduced 70 percent, price increases by overseas suppliers counteracted the tariff cut completely. And, while the tariff on gas was reduced five percent, overseas gas prices climbed sharply.
 
The main reason of the price increase is that the amount of circulated money is presently very huge.
 
Moreover, some materials have to be imported because local resources are inadequate. For instance, 70-90 percent of gasoline and steel ingots have to be imported.
 
The Ministry of Industry and Trade has worked with Vietnam National Petroleum Corporation (Petrolimex) to stabilize local gasoline prices. The Ministry suggests it might again subsidize gasoline.
 
But some enterprises say the world gasoline price is predicted to climb to US$100 per barrel. Can the Government afford subsidization?
 
Some economists say the State should save the funds for subsidization for better plans or projects and leave the market to determine prices. The State can’t control prices subjectively, they say.
 
Suggested solutions to the price increases
 
Some economists say that in order to slash prices, interest rates have to be monitored tightly and distribution has to be re-checked or reviewed to control intermediaries raising prices.
 
Others say it’s time to focus on local production to reduce imports. They argue the country has to take the initiative to depend less on world trade, to insolate itself from world price changes.
 
One economist said, “We joined the World Trade Organization so the Government’s policy of making inflation lower than the growth is inappropriate.”
 
“Instead of finding solutions to control CPI at 7.5 percent, Government should focus on raising its GDP targets. When the economic growth rate is high, CPI won’t affect the economy much even if it increases to 9-10 percent,” he added.

Source: SGGP.