Economic stimulus packages and disease control will have a great impact on price management in 2022

Inflation will be controlled at a low level

Director of the Price Management Department, Ministry of Finance Mr. Nguyen Anh Tuan, said thanks to the initiative and flexibility in management, inflation has been controlled at a low level. Accordingly, the price management has reached the target set by the National Assembly and the Government and inflation was controlled at a low level (below 4%) and expected at about 1.9%; core inflation in 2021 is forecast at 0.8-0.9%. This is an impressive result in the management of the Government amid the Covid-19 pandemic.

According to the assisting group of the Steering Committee for Price Management, the effective implementation of coordination has contributed to achieving the price management target. In addition, review, analysis and forecasts have played an increasingly important role, especially the development of an appropriate inflation and price management scenario, as a basis for making timely proposals for each period.

Expert Can Van Luc pointed out four reasons why domestic prices increase more slowly than the world’s: the economy's limited production capacity and low demand has resulted in inflation pressure; the slow uptrend of money supply; necessities have not increased sharply as in the pre-pandemic period, some products have slightly declined due to abundant supply; though prices of input materials have risen, selling prices might not rise due to low demand. Accordingly, many enterprises and sellers have been willing to maintain prices or offer discounts to promote consumption.

According to Ms. Hoang Viet Phuong, director of analysis at SSI Securities, this year's inflation is only about 1.8-2%, the lowest level in the past five years.

"It seems that inflation has not yet impacted Vietnam when looking at the published consumer price index (CPI). In November it only rose by 0.32% month-on-month, while the average CPI of eleven months of 2021 rose by 1.84% year-on-year, the lowest average rise of 11 months since 2016," said Ms. Hoang Viet Phuong.

2022 to face high pressure

According to many experts, inflation pressure in 2022 will increase. In particular, the economic stimulus package supports the growth of the economy but also puts pressure on inflation, making price management more difficult and challenging than in 2021.

The Ministry of Finance forecast that there are many factors putting pressure on the price level in 2022. Accordingly, fuel prices are forecast to see unpredictable movements; construction material prices are under pressure from world price impacts and investment demand when the economy recovers; prices of food, beverages, and garments increase due to holidays and the New Year period; fertilizer and animal feed prices may increase due to the increase in input costs.

It is expected that if the prices of some goods managed by the State must be adjusted according to the market roadmap, they will affect the price level such as the price of educational services, the price of electricity, water, the price of medical examination and treatment services, etc.

In particular, 2022 will face high pressure, especially when countries are speculating and hoarding strategic products, making raw material prices rise; especially in the beginning of 2022 when consumer demand normally increases during the Lunar New Year as well as the economy's aggregate demand recovers when the pandemic is brought under control.

It is said that the price management in 2022 must also consider the support of economic stimulus packages, the pandemic is controlled faster than expected, which will stimulate economic growth and expand inflationary pressure. Along with that, transportation and logistics costs go up because the broken supply chain has not completely recovered, as well as risks of natural disasters and bad weather. They are adverse factors affecting inflation in 2022.

Mr. Nguyen Anh Tuan said many price management scenarios in 2022 have been developed, including low-inflation scenarios and high-inflation scenarios in the context of adverse factors affecting price management.

However, the price management and inflation control in 2022 will continue to be performed prudently, flexibly and proactively, focusing on removing difficulties for production and business activities and stabilizing the price level and social security policies for disadvantaged groups.