Nguyen Tien Thoa, head of the Price Control Bureau under the Finance Ministry, told the Daily yesterday that the imminent power price hike coupled with the recent oil price rise, would exert pressure on both enterprises and the people. However, the impact will not be too big for concerns.

The Government has approved the power price effective from March 1, allowing for a rise of 6.8%, resulting in a new power price of VND1,058 a kWh on average. The ministries of Industry and Trade; and Finance are working on a detailed power price ladder, but poor people will enjoy unchanged power price for the first 50kWh, Thoa said.

Asked how the new power price will drive up the consumer price index (CPI), which already hit 1.36% in January and nearly 1.96% in February, Thoa said a 6.8% rise in power tariffs will add 0.16% to the CPI for the first-tier effect, and a 0.3% rise for the second-tier impact.

As the petrol price rise may add 0.01% to the CPI in March, he predicted the CPI next month at around 1%, meaning a 4.3% rise in CPI for the first quarter.

Thoa stressed that despite the higher inflation so far this year compared to that in the year-ago period, “there is no need to resort to urgent measures,” adding “we will wait until the end of the first quarter for further consideration, since we have to weigh other factors such as global prices.”

However, Thoa admitted that greater efforts must be taken if the country is to harness the 2010 inflation at 7% as endorsed by the National Assembly.

Nevertheless, several experts have voiced concerns over the rising inflation this year. As covered by the Daily in yesterday’s issue, several experts feared that, the target of curbing inflation at 7% will be unrealistic given price increases in major inputs for the economy, including petrol, power, and coal, the last named commodity likely rising by 28% in price.

In fact, according to Thoa, manufacturing industries will see their production costs rising by VND2.2 trillion, or between 0.09% and 2.28% depending on the levels of electricity consumed for each industry. The additional power bills for the entire economy will be VND4.5 trillion, which erodes the national gross domestic product by some 0.2%.

Source: VietNamNet/SGT