Economic stimulus packages and pandemic control will have a great impact on price management in 2022. Photo: ST

Inflation controlled at low level

According to Nguyen Anh Tuan, Director of Price Management, Ministry of Finance, thanks to taking the initiative and flexibility in administration, inflation has been controlled at a low level. Accordingly, the price management and administration has achieved the assigned targets of the National Assembly and the Government (inflation control is below 4%) and is controlled at low level which is expected at 1.9%; meanwhile, basic inflation in 2021 is forecast at 0.8-0.9%. This is a mark in the administration of the Government in the context of the Covid-19 pandemic affecting the domestic socio-economy.

According to the assisting group of the Price Administration Steering Committee, one of the factors contributing to the accomplishment of the price management and administration objectives is the coordination mechanism, which serves as a basis for consulting work for the Government, the Prime Minister and the Deputy Prime Minister about major guidelines and orientations on price management and administration in each period, forecasting and building price management scenarios in the short, intermediate and long term. Along with that, the work of synthesis, analysis and forecast plays an important role, especially the calculation and development of an inflation scenario, an appropriate price management scenario, taking as a basis for making appropriate recommendations in each period.

Expert Can Van Luc pointed out four reasons why domestic prices have increased slowly compared to the world: the economy's production capacity and demand were still weak, causing cost pressure to slowly turn into inflationary pressure; the slow uptrend of money supply; the group of non-core essential goods including food, foodstuffs, electricity and water, housing and construction materials did not increase as strongly as in the pre-pandemic period, a number of items still decreased slightly due to the abundant supply; although the price of input materials increased quite strongly, the selling price could not increase accordingly due to weak demand. Accordingly, many businesses and sellers are willing to keep prices unchanged or reduce prices to stimulate demand and accept reduced profit margins.

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

"It seems that inflation has not yet approached Vietnam when looking at the published consumer price index (CPI), as well as the estimate for the whole year, which is quite different from the CPI of countries around the world. Earlier, the CPI in November in Vietnam only increased by 0.32% compared to the previous month, while the average CPI of 11 months of 2021 increased by 1.84% compared to the same period last year, the lowest average increase of 11 months since 2016," Ms. Phuong said.

2022 faces high pressure

Many experts said that the inflation pressure in 2022 was very large. In particular, the economic stimulus package was aimed to support economic growth but it also puts pressure on inflation, making price management and administration more difficult and challenging than in 2021.

According to the Ministry of Finance, there are many factors that put pressure on the price level in 2022. Accordingly, fuel prices are forecast to continue to fluctuate unpredictably; construction material prices are under pressure from world price impacts and investment demand when the economy recovers; prices of food, beverages, and garments increase following the rules on holidays and Tet; fertilizer and animal feed prices may increase due to the impact of increased input costs. It is expected that the prices of some goods managed by the State, if they have to be adjusted following the market roadmap, will affect the price level such as the price of educational services, the price of electricity, water for daily life, the price of medical treatment services, etc.

In particular, inflation pressure in 2022 is very high, especially when the trend of countries speculating strategic products. It causes an increase in raw material prices, especially in the beginning of 2022 when consumer demand normally increases during the Lunar New Year holiday as well as the total demand of the economy recovers when the pandemic is under control.

According to many experts, the price management in 2022 must also take into account the support of economic stimulus packages, the pandemic situation is controlled faster than expected, which will stimulate faster growth and increase inflationary pressure.

Along with that, transportation and logistics costs increase because the broken supply chain has not completely recovered; risks of natural disasters, weather are adverse factors affecting inflation in 2022.

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

However, the price management and inflation control in 2022 will continue to be carried out cautiously, flexibly, and proactively, focusing on removing difficulties for production and business activities, stabilizing the price level to stabilize production and people's daily life, implementing social security policies for disadvantaged groups.