Lam said:

We are calculating the CPI for July based on the data we had on July 15. The preliminary results show the growing trend of considerable reductions in the CPI increase.

I still cannot give accurate figures, but I can say that the CPI increase in July will be much lower than June’s 2.14%. It will be definitely less than 2%.

The figures promise a satisfactory scenario for inflation in the last months of 2008. However, the decision to raise the petrol price by VND4,500/litre astonished me.

How will the petrol price increase influence the CPI in the coming months?

The 30% petrol price increase will surely seriously affect the CPI in coming months. Transport services and fuel will be directly affected. Higher transport service fees will lead to increases of food and foodstuff prices, and construction material prices. After that, the price increases of essential commodities will lead to the price increases of other products.

The biggest impact, I think, will be seen on the government’s policy to restrain inflation. The government has been on the right track with its tightened monetary policies, and now it will have more difficulties in its job to fight inflation.

Minister of Finance Vu Van Ninh said that the petrol price hike may make the CPI increase by 0.5-0.7% more in August. What is your comment on the figures forecast by Ninh?

I don’t know what the Ministry of Finance used to tabulate the figures. I think that it is very difficult to calculate all the direct and indirect impacts the petrol price hike will have on commodity price and service fee increases. We still need to wait until August to measure all the impacts.

However, I can say for sure that the impacts of the latest petrol price increase will be very big. This may stop the tendency of CPI growth decrease, which has just begun. The sharp petrol price increase will strongly influence many subjects, economic sectors and businesses.

You once said that Vietnam may succeed in holding the CPI increase at 24-25% by the end of the year. Will the petrol price increase change your mind?

The 24-25% CPI increase will come true if the CPI increases in the last months of the year can be restrained at 1-1.2%. As of mid July, I still believed that the scenario was possible.

However, it is clear that the petrol price hike will make the goal more difficult to reach. In order to restrain inflation, it is clear that we should not raise the prices of sensitive commodities like petrol. However, the government said that if the petrol price was not raised, the state budget would not be able to compensate petrol businesses for losses.

The government needs to take measures to try to keep the prices of essential commodities in place, and to control the market. The Ministry of Finance announced that petrol importers would incur the loss of VND60tril from now to the end of the year if the government did not raise the petrol price. However, we need to reconsider if we can further cut expenses to reduce losses. Importers also need to share difficulties with the government.

Source: TBKTVN