HCM CITY — Many economists predict that the latest fuel price hike will heavily affect the nation's price consumer index (CPI), presenting a new challenge for the government as it tries to curb inflation.
They say concerned agencies have to pay more attention to price management work in this situation.
The Price Management Department under the Ministry of Finance (MoF) estimates that the fuel price hikes on March 7 would make the national CPI increase by 0.85 per cent in 2012.
However, many analysts have said that the impact is likely to be much higher.
Nguyen Duc Thang, director of the General Statistic Office's Prices Department told the Nguoi Lao Dong (The Labourer) newspaper recently that the latest increase in fuel prices, of between VND600 and 2,100 per litre, was so high that it would strongly affect the CPI, particularly in March and April.
The fact was that all recent fuel price hikes have had tremendous impacts on the entire year's CPI. This year would be no different so agencies should closely monitor the pricing situation, he said.
The domestic market was likely to establish new price levels for many kinds of commodities and services so management agencies' intervention was required to ensure things do not get out of hand, said Vu Vinh Phu, President of the Ha Noi Supermarket Association.
The Government would also face many difficulties in achieving its target of keeping inflation under two digits this year, said Ngo Tri Long, former head of MoF's price and market research institute.
He recalled that in 2008, when petrol prices increased by VND4,500 per litre, inflation rose to nearly 20 per cent. In February in 2011, when fuel prices went up by VND2,900 per litre and the year's inflation was 18.3 per cent, Long said.
The Price Management Department's calculation of a resultant CPI increase of just 0.85 per cent was impractical, he said.
Long stressed the need for forecasts that were closer to the reality so that effective response measures can be devised.
He suggested that the Price Management Department and the Market Management Department cooperate with each other to inspect price increases of enterprises and individuals to ensure all changes must be reasonable.
Long called for strict inspections of organisations, agencies and enterprises that used the State Budget for buying petroleum products, he said.
He also proposed that enterprises find ways to cut production costs and improve production technology to reduce the use of fuel.
Nguyen Manh Hung, general secretary of the Viet Nam Auto Transport Association, said that the association asked its members to carefully calculate the impacts of fuel price hikes before making any price adjustments.
The association also asked its members to reorganise operations in ways that could cut costs and stabilise transport charges since fuel prices would possibly tend to rise in the near future, Hung said. — VNS