Chủ đề: inflation

Latest HSBC report indicates promise for Vietnam’s economy but also lingering issues.

According to analysts at the “Inflation Spiral - Cost-Push Control” dialogue held by VnEconomy on April 4, domestic gasoline prices increased 48.81 per cent year-on-year in the first quarter while fertilizer prices posted the highest increase for 50 years. Rising prices are putting pressure on inflation and affecting incomes and expenditure, which adversely impacts economic growth.

Latest report sees growth remaining steady this year but with inflation likely to increase.

Inflation is currently being supported by three factors: the price of food, the government’s management of pricing, and monetary policies. However, the inflation rate may not remain at its current low level due to many factors. Analysts have predicted that if global oil prices remain at $100 a barrel, inflation may reach 3.5 per cent, but if the price reaches $120 a barrel, the rate will breach the 4 per cent limit.

According to Mr. Nguyen Ba Khang, Deputy Director of the National Financial Supervisory Information Center at the National Financial Supervisory Commission, excessively high gasoline prices have had an impact on the effectiveness of Vietnam’s economic recovery support package. Inflation, however, will be kept at 2-2.2 per cent in the first quarter and not increase significantly for the year as a whole.

According to Dragon Capital, oil prices may exceed $150 a barrel this year due to the crisis between Russia and Ukraine. Stock market investors therefore need to prepare for a worst-case scenario of inflation reaching 4.18 per cent in 2022, exceeding the target set by the government of less than 4 per cent.

It has been forecast that the inflation rate in Vietnam will probably exceed 4 per cent year-on-year in the second quarter, due to increases in the global prices of electricity, pork, and oil. Viet Dragon Securities believes that banking shares have clear profit growth prospects in the second half of the year, while steel, retail, warehousing, and exporter shares are also expected to attract cash flows.

Deputy Prime Minister and Head of the Price Management Steering Committee Le Minh Khai has asked nine ministries and sectors to closely monitor movements in supply and demand and price fluctuations in order to promptly respond and control inflation.

The CPI increased just 1.84 per cent year-on-year in 2021; its lowest rise since 2016. Core inflation for the year increased 0.81 per cent.

Though CPI in the first eleven months was at its lowest level for five years, analysts believe it may increase sharply next year due to “import inflation” and demand-pull factors.

Experts have said that suppressed demand will be unleashed once the pandemic is over, causing a major supply-demand gap and contributing to a sharp increase in prices, with inflationary pressures likely to result.