A Petrolimex gas station prepares for the listing of new petrol prices.Economist Can Van Luc said CPI is highly sensitive to fuel prices (photo: VNA) He was speaking at the workshop "Inflation in 2022: Impacts and policyrecommendations" held on September 16.
Viet said inflationary pressures have begun to build up but thesituation is under control so far. Eight-month Consumer Price Index (CPI)rose by just 2.58% year-on-year, well under the target of 4%.
GDPgrowth hit 7.7% in Q2, the highest quarterly growth in ten years.Eight-month Index of Industrial Production was 15.7% higher than the sameperiod in 2021.
Exports fared quite well amid the global trade downturn with an eight-monthrevenue of 250.8 billion USD, up 17.3% year-on-year. Of which, textilesare expected to keep riding high in the rest of 2022 thanks to free tradeagreements.
He opined that the inflationary pressures would abate should globalfood and fuel prices cool down and supply chain disruptions improvein the short term. He forecast Vietnam’s inflation would stay at around 3.3 and3.8% this year.
Regarding the disparity between consumers' perceived inflation and theGeneral Statistics Office (GSO)'s estimated inflation, Viet told Viet Nam News that the disparity can beattributed to the under-weighting of fuels, foods, and transportationcosts in the CPI basket.
"The weights assigned to fuels, foods, and transportation costsin CPI basket in Việt Nam are lower than those inASEAN 3," he said.
Can Van Luc, chief economist of the BIDV, suggested the use of the ProducerPrice Index and Core Inflation in addition to CPI to trace the real causes ofinflation, which could be cost-push or monetary.
He said inflation in Vietnam has not reached its peak due to time lags andforecast that inflation would rise further towards year-end.
Regarding weights assigned to items in the CPI basket, he said the weightsare adjusted in every five years. For example, the weight of foods is 33.6%currently, against the previous weight of 36%.
He also opined that the Government has done quite well in curbing inflation viafuel price stabilisation and food supply control.
The two measures were highly effective against rising pricesbecause transportation costs, food prices and construction material pricesmade up 90% of the rise in CPI.
Economic expert Vu Dinh Anh asserted that Vietnam put macro-economic stabilityat the top of the agenda. Fast economic growth at the cost of stability isnever an option.
"We have had to pay a heavy price for the macro-economicinstability between 2006 and 2011," he said.
The expert is all for higher caps on credit growth. He underscored creditgrowth caps as an administrative tool to raise total credits, which,he believed, is safer than market-based tools in termof systematic stability.
He also said the tool could facilitate banking system's restructuring bygiving higher credit quotas to healthy banks and lower credit quotas toless healthy ones, thereby encouraging sector competition./.
VNA
