Keeping CPI low key to inflation control this year

Shoppers at a supermarket in District 3, HCM City. VNA/VNS Photo

HÀ NỘI - Việt Nam's CPI must stay within the upward 0.26-0.39 per cent range for the rest of the year to keep inflation within 4.0-4.5 per cent in 2024, said the Ministry of Finance (MoF) in a government meeting held yesterday morning in Hà Nội, chaired by Deputy Prime Minister Lê Minh Khái.

Deputy Minister of Finance Nguyễn Đức Chi said with the global economy still struggling to find a path to recovery and geopolitical tensions on the rise in hotspots around the world, the prices of commodities, energy and gold will likely see strong fluctuations in the near future.

Demand for foodstuff, textiles and homewares showed signs of recovery since the beginning of the year, Việt Nam's CPI has been on the rise, following higher prices on the international market. After the holidays, as supply increased and demand slowed, prices have been readjusted by market forces, including key commodities such as rice and pork.

In a report by the General Statistics Office of Vietnam (GSO), CPI in the first few months of the year has increased by 0.31 per cent in January and 1.04 per cent in February year-on-year. Meanwhile, March's CPI decreased by 0.23 per cent, bringing the average CPI in Q1 2024 to an increase of 3.77 per cent year-on-year. Inflation during the year's first quarter increased by 2.81 per cent year-on-year.

Key factors putting pressure on CPI for the remainder of the year, according to the MoF, included prices of raw materials, key consumer goods and oil prices.

"The prices of input materials have been on the rise worldwide. Meanwhile, Việt Nam continues to rely on imports of materials heavily. Major fluctuations in the international market can drive prices up in the domestic market. A stronger dollar can also put significant pressure and cost on top of materials," said the latest report by the MoF.

To make matters worse, ocean shipping will likely become more expensive, cutting further into businesses' profits.

According to the MoF's report, the average CPI for the year could increase up to 4.5 per cent compared to the previous year with the State Bank of Vietnam's inflation forecast at 3.8-4.8 per cent. In a more optimistic scenario, CPI can be kept as low as an increase of 3.64 per cent to 4.05 per cent year-on-year.

The report stressed the importance of a proactive approach to controlling CPI as summer and upcoming long vacations will likely see increased demand for travel, electricity and construction materials in the domestic market.

Deputy Prime Minister Lê Minh Khái ordered ministries and governmental agencies to stay on top of market developments and prepare solutions to intervene when necessary to keep inflation in check.