Government’s price tracker predicts 2009 CPI increase of seven percent
Tran Thi Hang is director of the Trade Service and Price Department, a unit of the General Statistics Office (GSO). As it became clear that the second highest monthly price increase of 2009 would be recorded in September, she was asked if inflationary pressures are building.
Is it reasonable to compare 2009, a year of world economic crisis, with previous ‘normal’ years?
The price uptick is, I think, the result of the recovery of the national economy. Production began to recover from the second quarter of the year, and increased significantly in the third quarter.
The 0.62 percent increase in the CPI (commodity price index) in September is not high enough to be called a ‘price shock.’ Every year, the CPI gets pushed up by price increases in the education sector when new school year begins. That sector was up 4.33 percent in September.
Travel services costs also rose significantly, 2.37 percent, because of the fuel price increases in August and previous months.
The sharp price increases in those two sectors explain almost all of the 0.62 percent CPI increase in September.
Some experts point to increases in the money supply and higher commodities prices in the world market. Do you agree?
Our petroleum price has been driven up by the rising prices in the world market. Steel prices are up too. Prices of other commodities have also risen in recent months, though the price levels are still lower than they were a year ago.
Vietnam relys on imports as inputs to domestic production, especially steel and petroleum. As the national economy recovers and production rises, the demand for such inputs rises and the prices of goods and services increases too.
Why were the price rises greater (1.59%) in the HCM City region?
Rice prices ticked upward in HCMC, there was a spurt in transport costs, and school costs rose by a whopping13.34 percent.
Which factor is driving the CPI?
I think so far that it’s demand that’s driving prices, not insufficient supply. Some reports say that inventories have grown to some 20 percent.
The biggest component of the CPI is the cost of food, and this is a very productive year for the agriculture sector. After satisfying domestic demand, we still can export six million tonnes of rice this year. Meat production has increased by over 10 percent and seafood output is good too. I cannot see any problems with the supply
What’s the outlook for the rest of the year?
I can say for sure that the CPI in the fourth quarter of 2009 will not decrease like it did in the fourth quarter of 2008, but I’m also confident that it will increase by less than one percent per month. We’ll hold 2009 price increases to the one digit level. More precisely, I’m guessing seven percent.
