Vietnam: Inflation likely to stay below 4.5% this year

HANOI: The goal of keeping inflation under 4.5% this year is totally feasible, as the rate will likely range between 2.5 and 3.5%, according to experts.

Vice-director of the Institute of Economics and Finance under the Academy of Finance Nguyen Duc Do analysed that factors like money supply, interest rates and aggregate demand not only caused inflation to drop sharply in the first six months of 2023, but also restrained the consumer price index (CPI) increases in the last six months.

Over the past year, the CPI has only increased 0.17% per month on average, he noted.

Do predicted that if the rate continues to be maintained for the rest of the year, the inflation rate in 2023 will be at 2.5%, which means the target of under 4.5% for this year will be reached.

Economist Vu Vinh Phu said the CPI this year would not exceed 3.8 to 4%, helping the country to stabilise the macro-economy and rein in inflation.

According to the Price Management Department under the Finance Ministry, the world’s economic situation for the rest of the year has yet to show positive signals due to the escalating Russia-Ukraine conflict.

Vietnam is also experiencing slow economic growth and a decline in exports due to the falling demands of importers.

In the domestic market, the department highlighted a number of factors posing pressures on prices such as a 20% rise in basic salary from July 1 and an increase in commodity prices.

However, it pointed out that petrol prices are forecast to continue to fall or remain stable, while the supply of food and goods in the market has been abundant, and global inflation may drop, helping ease the pressure on Vietnam.

Deputy director of the Price Management Department Pham Van Binh held that with the CPI growth rate as recorded in the first six months of 2023, there are high hopes to control inflation this year, enabling the flexible adjustments of the prices of some state-managed goods.

But the impact of the price adjustment of state-managed goods on the CPI in 2023 depends on the time of issuance of legal documents on price adjustment of commodities by ministries and sectors.

In addition, the fact that core inflation is at a much higher level than general inflation indicates long-term high inflation risks, he said.

In the last months of the year, the department will continue to coordinate with ministries and local authorities to implement drastic measures on price management in a cautious and flexible manner, while giving advice to the Prime Minister and the steering committee for price management.

The department said that the CPI in the first half of this year rose 3.29% over the same period last year, which was lower than that in the same time of 2014, 2017 and 2020, but higher than the remaining years in the 2014t o 2023 period.

Meanwhile, core inflation rose 4.74%, the highest level in the first half of a year in the 2014 to 2023 period. — Viet Nam News/ANN