Vietnam can contain inflation below 4% this year: finance ministry

The consumer price index (CPI) might rise 3.27-3.51% on average in Vietnam this year, below the State Bank's target of 4%, the Ministry of Finance told a meeting on price control Thursday.

The figure is in line with the projections of the General Statistics Office (GSO) at 3.2-3.5% and the State Bank of Vietnam at 3.4% with a variation of two percentage points.

Vietnam’s CPI in the third quarter of this year increased by 3.32% from a year earlier, according to the GSO. The figure for the first nine months of the year was up 1.88% year-on-year.

In September alone, the index went up 0.4% month-on-month, and 3.94% year-on-year, mainly due to increases in prices of essential goods and services as well as tuition fees in certain localities.

The finance ministry noted the high demand for production of goods and the higher prices of commodities globally pushed up inflation amid Vietnam’s pacey post-pandemic economic recovery.

The ministry listed main pressures in the rest of this year, including unpredictable fuel prices; hike in prices of foods, drinks and clothes in the seasonal transition time and year-end festivals; higher pork prices if sufficient supply not secured; the recovery of tourism, recreational, and cultural services in the post-pandemic period; and disbursed public investment pushing up prices of construction materials.

Addressing the event, Deputy Prime Minister Le Minh Khai asked relevant ministries and localities to manage the combination of monetary and fiscal policies harmously to tame inflation, ensure macroeconomic stability and major economic balances.

He also requested the Ministry of Industry and Trade to ensure the stable and effective operation of the fuel supply system, amid the recent shuttered activities of gas stations.

The IMF in a report named World Economic Outlook Update released on September 6 suggested three measures for the Southeast Asian country.

First, fiscal policy should take the lead in aiding recovery, yet flexibly adjusted to evolving economic conditions. Second, the central bank should focus on rising inflationary risks, and communicate that it’s ready to act as needed and remains committed to meeting its inflation target.

Third, authorities should continue addressing bad loans in the banking system and closely monitor for potential risks in real estate markets to safeguard financial stability.