Limiting the impact on market prices in 2015

(Baonghean) - The Ministry of Finance has just reported to the Government on the price market situation in August and forecasted consumer prices in September. Accordingly, CPI in August 2015 increased by 0.61% compared to the same period in 2014, and the average CPI in the first 8 months of 2015 compared to the same period last year increased by 0.83%, the lowest since 2002. The gold price index decreased by 4.95%, the US dollar price index increased by 2.33% compared to December 2014.

Low increase

According to the Price Management Department (Ministry of Finance), in terms of commodity group structure, 8/11 main commodity and service groups had CPI increases compared to the previous month, however the increase was low. Notably, 3 groups had the largest decrease: the transportation group had the largest decrease of 2.18%; the housing and construction materials group decreased by 0.45%; the other goods and services group decreased by 0.02%. Compared to the same period in 2014, the consumer price index in the first 8 months of 2015 increased the most in the education group (increased by 8.93% due to the price of educational services adjusted up in some localities in the second half of 2014, so the price level of educational services in the first 8 months of 2015 was higher than the same period in 2014), followed by the garment, hat, and footwear group (increased by 3.31%). The two groups of transportation, housing and construction materials had sharp CPI decreases (-12.95%, -1.37% respectively) due to the continuous decrease in gasoline prices from September 2014 to March 2015 and from late July 2015 to August 2015, keeping the overall CPI increase low compared to previous years.

The provincial Market Management Department inspects a sales establishment on Hong Bang Street (Vinh City). Photo: Thanh Quynh

By region and locality, CPI in August 2015 increased in 2/8 economic regions; in which the Red River Delta and the Central Highlands increased by 0.06% and 0.02% respectively compared to July 2015. By urban and rural areas, the consumer price index in August 2015 in urban and rural areas both decreased, by 0.05% and 0.10% respectively compared to July 2015. By locality, the CPI in the 2 major cities in the country was in opposite directions. In Hanoi, the consumer price index in August 2015 increased by 0.17% compared to July 2015; other provinces and cities with increased CPI include: Thai Nguyen, Hai Phong, Gia Lai, Can Tho. In Ho Chi Minh City, the consumer price index in August 2015 decreased by 0.12% compared to July 2015; Other provinces and cities with CPI reduction include: Thua Thien - Hue, Da Nang, Khanh Hoa, Vinh Long...

Export market is still difficult

Among the reasons for the above-mentioned fluctuations in market prices, the Ministry of Finance paid special attention to the difficult export market. The world market prices of some commodities that account for a large proportion of our country's import and export turnover in August showed a downward trend, in which crude oil and LPG (Liquefied Petroleum Gas) prices decreased; the export rice offering price in Vietnam also continued to decrease. The abundant domestic food supply contributed to the decrease in the food price index (0.16%). In line with the world price developments, the Ministry of Industry and Trade - Ministry of Finance directed a reduction in gasoline prices, accordingly, the transportation group decreased by 2.18%, contributing 0.20% to the overall decrease in CPI. Domestic LPG prices also decreased by 8,000 - 10,000 VND/12 kg cylinder (since August 1), the third consecutive month that gas prices have decreased.

The weather in some localities has become less hot, so electricity consumption is lower than last month, so the electricity price index decreased by 0.32%. Construction material prices decreased slightly by 0.01% due to the rainy season. The price index of housing, construction materials, fuels, etc. decreased by 0.45%. The work of price management and stabilization continues to be directed and implemented resolutely and continuously by ministries, branches and localities. The work of inspection and control of compliance with legal regulations on prices, regulations on price adjustment, registration, declaration, price posting and selling at listed prices continues to be strengthened.

On the other hand, the Ministry of Finance also noted the factors that caused market prices to increase. In particular, the demand for raw materials to prepare cakes for the Mid-Autumn Festival increased, causing the prices of some raw materials (sugar, chicken eggs, duck eggs, etc.) to increase. At the same time, entering the new school year 2015 - 2016, contributed to the price index of the education group increasing by 0.87%. In addition, due to the continued hot weather, the demand for electricity, water, out-of-home catering services, refreshments, and public transport services increased, also causing pressure to increase prices in August 2015; the group of household appliances and equipment increased by 0.11% due to the need to cool down and prevent heat in the summer, the prices of electrical appliances such as air conditioners, refrigerators, and electric fans increased by 0.2% - 0.9%...

Closely monitor prices of goods and services

Forecasts and recommendations for price stabilization measures in September by the authorities show that, due to the impact of the gasoline price reduction adjustment on August 19, 2015, which will be included in the September 2015 price index calculation period; forecasts that world prices of some fuel products such as finished gasoline, LPG, and exported rice in September will continue to decrease or remain low... will facilitate the work of managing domestic market prices. In September, according to forecasts, supply and demand of goods will continue to be guaranteed. The price stabilization program for the 2015-2016 school opening season, which has been effectively implemented since the beginning of the year in some localities (typically Ho Chi Minh City), will help reduce the pressure on price increases.

The State Bank's increase of the average interbank exchange rate between the Vietnamese Dong and the US dollar by 1.0%, and the continued increase of the exchange rate band from ± 2.0% to ± 3.0% will make the price of imported goods into Vietnam in Vietnamese Dong more expensive, which may impact the domestic price level from now until the end of 2015. In addition, from now until November 2015, it will continue to be the rainy and stormy season, with impacts on life and production, which may affect supply, causing local price increases in the areas where the storms pass. With the above forecast, the authorities have proposed price stabilization measures.

In particular, with gasoline prices, since the beginning of 2015 until now, the downward trend has been clear and will have a positive impact on the market, along with the adjustment of the exchange rate range, which will have an impact on the prices of imported goods... which may cause the domestic price level to increase from now until the end of 2015. Therefore, to strengthen management and price stabilization in the area, including car transportation fares and other essential goods, the Ministry of Finance recommends that ministries, branches and localities focus on closely monitoring the developments of supply and demand, domestic and international market prices, and do a good job of collecting, analyzing and forecasting market information to promptly advise and propose to the Provincial People's Committee to direct the implementation of solutions to stabilize prices and control inflation.

In addition, strengthen inspection and supervision of compliance with legal regulations on price management, taxes, and fees for essential goods and services (transportation fares, milk prices for children under 6 years old, medicine prices, cement, construction steel, animal feed, liquefied petroleum gas (LPG)), etc. Strictly handle violations according to legal regulations and publicly announce them on mass media. Closely monitor and review price declarations by enterprises for price-stabilized goods, goods on the price declaration list; for goods directly affected by gasoline prices, oil prices, and prices of other input factors.

The Ministry of Finance also requires a resolute halt to cases of price increase declarations that are inconsistent with the impact of input factors and market price levels. Particularly for automobile transportation fares, the Department of Finance will coordinate with the Department of Transport to advise the Provincial People's Committee to issue a document requesting automobile transportation enterprises to declare fares consistent with the impact of fuel cost reduction on transportation fares compared to the previous declaration time and conduct a review according to regulations.

Red River