August 6, 2010

Vietnam's CPI to remain stable in August

Despite a global hike in input materials in the global market, Vietnam's consumer prices are expected to remain stable this month, according to the Ministry of Industry and Trade' Domestic Market Regulator group.

The group said the availability of good supply sources and a continuous implementation of the government's price stability programmes would help local businesses stock up with goods in anticipation of a possible surge in prices in major cities, meaning the consumer price index (CPI) would remain stable in August.

After the successes of the price stability programmes, which left last month's CPI at 0.06%-the lowest level since March 2009-the government will continue implementing the programmes in big cities including Hanoi, Ho Chi Minh City, Phu Yen, Khanh Hoa and Dong Nai.

The group's deputy head, Truong Quang Hoai Nam, said the team had so far required market watch forces at cities and provinces nationwide to keep a close watch over price label and registration of several goods including milk-whose prices had significantly increased recently.

"The closer watch would help minimise speculation and unreasonable price rises," Nam said.

Attendees also mentioned stricter supervision of imported milk products as the product prices remained high.

The Ministry of Planning and Investment has so far also predicted the CPI in August would continue to increase slightly and inflation for the whole year would be kept below the government's target of 8%.

Citing the gradual decrease in the CPI, the government's policies to stabilise prices have started to pay off in recent months, driving July's CPI growth to a record low from 1.35% in the first quarter to 0.21% in the second quarter and to 0.44% in the third quarter, according to General Statistics Office. "However, there was still much to be done to achieve the government's inflation target, as so far inflation this year has climbed to 4.84%," the GSO said.

Factors emerging from the world's economy recovery may affect input costs as well as natural disasters are likely to result in a restriction of supply, prompting increases in the prices of essential goods, leading to a rise in inflation.

Therefore, the government and relevant bodies should be well-prepared to take flexible measures to deal with the worst case scenarios, according to the GSO.