Deputy Prime Minister Le Minh Khai chairs the meeting of the Price Management Steering Committee. Photo: VGP

Inflation forecasts are under control

Report at the meeting of the Price Management Steering Committee to review the price management and administration work in the first quarter of 2024 and orient the price management work for the remaining months of 2024 on April 24, the Ministry of Finance said, in the first months of 2024, market prices fluctuate according to annual rules, increasing in the first two months of the year due to falling on the time approaching Tet and the month of the Lunar New Year 2024, then decreasing in March. In April, common commodity prices did not see major fluctuations. On average, in the first quarter of 2024 compared to the same period last year, the consumer price index (CPI) rose by 3.77% and core inflation rose by 2.81%.

However, according to the Ministry of Finance, prices of some raw materials, essential consumer goods and services are forecast to increase.

For example, gasoline prices are forecast to fluctuate complicatedly according to price movements and world supply and demand. Export rice prices may soon stabilize and increase again in the context of supply from major export markets showing no signs of easing. Prices for shipping services by sea and surcharges for containerized goods at seaports are surging, putting pressure on businesses' costs.

The Ministry of Finance also pointed out a number of other factors that put pressure on the price level such as inflation expectations when implementing wage reform, risks of natural disasters and adverse weather.

Therefore, basing on the goals and impact assessment, the Ministry of Finance updated three price management scenarios, corresponding to the forecast that the average CPI in 2024 will increase by about 3.64% compared to 2023 (scenario 1); increased by 4.05% (scenario 2) and increased by about 4.5% (scenario 3). The General Statistics Office forecasts the average CPI in the range of 3.8-4.5%. The State Bank forecasts that average inflation in 2024 will increase in the range of 4.3% ± 0.5%.

According to estimates by the Ministry of Finance, if it is assumed that CPI in the remaining months will increase at the same rate compared to the previous month, then in the remaining nine months of 2024, CPI of each month will have room to increase by about 0.26-0.39% to ensure the target of controlling average inflation in 2024 in the range of 4-4.5% according to the set target.

In a recent announcement, World Bank (WB) experts stated that inflation is forecast to increase slightly to 3.5% in 2024, mainly due to the prices of state-managed goods such as education and health are expected to increase. But inflation will fall to 3% in 2025 and 2026 due to expectations that energy and raw material prices will stabilize.

In response to the above forecasts, Deputy Minister of Planning and Investment Tran Quoc Phuong said that the forecasts are basically under control, in accordance with the proposed scenario. However, the Deputy Minister expressed concern that the regulatory of the prices of State-managed goods will affect inflation, especially at the time of applying the new salary policy from July 2024, so it is necessary to avoid price adjustments in this time.

Deputy Minister of Finance Nguyen Duc Chi said that ministries and agencies need to closely monitor domestic market price fluctuations to advise on appropriate, flexible and timely price management policies and scenarios; at the same time, strengthen communication work to avoid inflation expectations.

Ensuring supply and demand, managing prices reasonably

Directing at the meeting, Deputy Prime Minister Le Minh Khai, Head of the Price Management Steering Committee, highly appreciated the price management work of ministries and agencies in the first quarter of 2024. However, in the second quarter and the remaining months of 2024, the Deputy Prime Minister said that the price management is still under great pressure.

To proactively respond to challenges in price management, the Deputy Prime Minister requested ministries and agencies to closely monitor economic developments at home and abroad, and make detailed and specific forecasts of impact factors on the general price level, especially essential goods and services to proactively build detailed scenarios for each industry and field, ensuring closeness to reality, thereby advising, proposing and implementing appropriate, timely and effective price management solutions.

Deputy Prime Minister Le Minh Khai said that the price management is still under great pressure.

Regarding price adjustment of essential goods and services, the Deputy Prime Minister requested ministries and agencies to consider the appropriate time for the implementation of the new wage policy, ensuring inflation control according to the target.

Based on the price management scenario, ministries, central and local agencies, according to their assigned functions and tasks, direct the preparation of adequate supplies of essential goods, especially essential goods with high weight in the CPI.

Regarding gold prices, especially gold bars, Deputy Prime Minister Le Minh Khai requested the State Bank to seriously implement the instructions of the Government and the Prime Minister on gold product management. In the immediate future, we must ensure supply and demand and reasonable prices, and at the same time, we must research and propose long-term solutions for managing gold products, both ensuring state management requirements and meeting the legitimate needs of people.

In addition, the Head of the Price Management Steering Committee suggested that agencies continue to promote communication work, ensuring timeliness, transparency and honesty of price information and regulatory work. Ministries and agencies focus on building and perfecting mechanisms and policies related to price laws; continue to research, advise and propose solutions related to taxes and fees to support people and businesses; and operate monetary policy reasonably.