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Inflation expected to see modest reheating in April

Update: April, 04/2012 - 10:12


A grocery store in the central city of Da Nang's Han Market. — VNS Photo Doan Tung
HA NOI — Inflation in April is expected to rise by a one-month rate of as much as 0.5 per cent, representing an increase over last month's very gradual increase in the consumer price index of just 0.16 per cent, according to experts at a meeting held last week by the Ministry of Industry and Trade's market management team.

They pointed to recent hikes in energy prices, including petrol, as likely to lead to a modest reheating of inflation. Higher transport and distribution costs have already led some major retailers to increase retail prices on goods by 3 to 4 per cent in recent days, and rising healthcare costs were also helping drive up inflation, experts said.

Only a declining trend in gas prices worldwide has allowed domestic cooking gas distributors to plan price reductions of an estimated 16 per cent this month.

Other optimistic signs expected to keep inflation in check included sufficient supplies of food and food products in the market.

At the Government's monthly meeting last Saturday, the Ministry of Finance also reaffirmed that goods subject to State price controls or required by the State for public purposes or national programmes would continue to be closely monitored between now and the end of the year. Prices of other consumer products, including agricultural and food products, would continue to be set by the market, with all price control systems to be lifted gradually, according to the ministry.

Electricity rates would only be allowed to increase slightly and would not be adjusted to reflect disparities between domestic and foreign currencies or the power industry's accumulated losses in 2010, the ministry said. Coal prices would also be adjusted to the equivalent of 90 per cent of the price for comparable types of coal for export.

Fuel prices would continue to be managed under Government Decree No 84, the ministry said. Under the decree, petrol distributors could adjust petrol prices by up to 7 per cent when global prices fluctuate by up to 7 per cent within the past 30 days. When the global oil prices rise by 7-12 per cent, these enterprises would be allowed to increase prices by an amount up to 60 per cent of the global increase, while the balance to be offset by import tax adjustments and the fuel stabilisation fund.

The costs of healthcare, education and other public services would be allowed to increase according to market forces in order to ensure providers remain solvent and provide high-quality services, the ministry said. — VNS

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