What factors put pressure on inflation this year?

Average CPI in the first quarter of 2021 increased by 0.29% compared to the first quarter of 2020, the lowest level since 2002. However, the General Statistics Office said that inflationary pressure is not small from now to the end of the year, especially in the context of low inflation last year, due to the bottom of gasoline prices due to the impact of the Covid-19 epidemic.

What factors put pressure on inflation this year?

What factors put pressure on inflation this year?

Ms. Nguyen Thi Oanh, Director of the Department of Price Statistics, General Statistics Office, said the first factor affecting inflation this year is the recovery of the global economy because many countries around the world have been vaccinated. Covid-19 widely. Economic recovery, demand for goods and services increased, making the general ground commodity prices also increase.

At the same time, the enterprises adapt to new normal conditions, production, trade and service activities are again vibrant, since then the demand for capital, fuel and raw materials also increases. Besides, the consumption of the people also increased higher than the same period last year when it was affected by the Covid-19 epidemic. Indicators showing the recovery of the economy are shown by the GDP increase of 4.48% in the first 3 months of the year, the total retail sales of goods and consumer services also increase 5.1%.

The second factor affecting inflation is the complicated development of oil prices. OPEC and its allies have maintained a lower production rate than demand, causing oil prices to rise. According to a study by the General Statistics Office, the average Brent oil price in the first quarter was more than 60 USD / barrel, an increase of more than 20% / barrel compared to December 2020 and compared to the first quarter of last year.

In fact, the demand for oil is directly proportional to the level of economic recovery. Since the beginning of the year, Vietnam has adjusted gasoline prices 5 times, making A95 gasoline prices increase by 2,570 VND / liter compared to December 2020. Similarly, gasoline price E5 increased 2,340 VND / liter and diesel oil price increased 1,870 VND / liter. On average, in the first quarter, domestic gasoline prices increased by nearly 11% compared to December 2020. Currently, Vietnam still imports a large amount of petroleum to serve domestic demand. According to the General Statistics Office, crude oil exports were estimated at $ 384 million in the first quarter, but imports more than doubled, at $ 772 million. Therefore, the increase in world petroleum prices will affect domestic production and consumption, leading to fluctuations in commodity prices.

According to forecasts of international organizations, the average Brent oil price this year will be 60 USD / barrel, an increase of 40% compared to 2020. Based on this forecast, the General Statistics Office has calculated and projected the price. Domestic petroleum will also increase by 25% compared to 2020, causing CPI to increase by 0.9 percentage points this year.

Recently, the Government and the Central Bank have also introduced fiscal packages, loosening monetary policy to stimulate and support businesses and people after being affected by the billion-dollar Covid-19 epidemic. USD … these are also pressures on inflation.

In addition, the price management of some State-managed items must continue to follow the roadmap of increased adjustment such as the price of medical services and education according to representatives of the General Statistics Office, which will also affect the CPI.

“According to our observation, with the management experience and the Government’s drasticity in the direction of price control, the CPI target of less than 4% is completely achieved”, Ms. Nguyen Thi Huong, General Director The Bureau of Statistics said.

However, in order to achieve the inflation target of less than 4%, the General Statistics Office recommends that the price adjustment of state-managed goods should be at the right time and at the right dose, taking advantage of the months with the index. CPI soars to adjust the prices of state-controlled goods, thus limiting expected inflation. At the same time, not to increase prices in the months CPI in 2020 was at a low level to keep it low compared to the same period last year. In particular, in April, prices of state-controlled goods should not be increased because last April inflation dropped sharply, by 1.54%.

In addition, commodity price adjustments should not be accumulated in the last months of the year. Because this is the time when consumer demand increases, if the price of services increases at this time, it will cause the CPI to continue to rise, the expected inflation is very high and create pressure to control inflation next year.

For health services, the General Statistics Office recommends adjusting the costs in medical examination and treatment services in July and August as usual. For petroleum products, the statistics agency proposes the Ministry of Finance and the Ministry of Industry and Trade to closely direct the change in the movement of petroleum prices in the world, combined with the price stabilization fund so that the price of these items does not affect too high for CPI.

Finally, the State Bank is recommended to synchronously and flexibly use the monetary policy tool in supporting enterprises to overcome the Covid-19 translation in order not to put pressure on inflation this year.

Source: ndh.vn – Translated by fintel.vn

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