Nhan Dan - Alhough the lunar new year (Tet) festival took place in January, Vietnam’s consumer price index (CPI) rose only 1% against the previous month, a slight increase compared to the past five months and the lowest increase over the same period in the past three years. This reflected relatively stable market prices and low purchasing power than the previous years.
However, last month’s CPI was calculated on the basis of combined data from the 15th of December, 2011 to the 15th of January, 2012, thus it only partially reflected the market situation before Tet holiday. Changes in price for commodity and service groups, especially food during and after Tet will be fully reflected in the CPI for February.
The task of inflation control must not be neglected despite the slow pace of CPI increase in this January. In 2011, inflation rose by 18.13%, a sharp increase compared to other countries in the region. In 2012, the Government will try to limit inflation at a single digit and to stabilise the macro-economy. Looking back at 2011, the government’s timely adoption of Resolution No. 11 on implementing measures to curb inflation, stabilising the macro economy, and ensuring social security prevented the inflation from a greater increase. The Government also took drastic measures to tighten fiscal and monetary policies, and as a result, the budget deficit dropped from 5.6% of GDP in 2010 to 4.9% in 2011, which reduced aggregate demand and pressure on the price level.
The strong and synchronous implementation of a wide range of measures has brought about positive results in inflation control and macro-economic stabilisation in the past year. Therefore in 2012, the implementation of the resolution should continue to be strict, with the continued tightening monetary policy and the adoption of policies to gradually lower interest rates to help small-and medium-sized enterprises with their difficulties, especially to reduce their production costs. Controlling the price of essential commodities to ensure the balance of supply and demand must also be prioritized. The recent price increases in electricity, coal, and petroleum has affected the price of many commodities in the market, thus a road map for the the adjustments in these prices should suit the country’s real conditions. It it is necessary to strengthen the price management and market inspections to prevent speculation.
Special attention must be paid to renovating the growth models and restructuring the economy in the direction of improving efficiency and competitiveness - which have been identified as the core causes of macro-economic instability.