Despite the negative impact of the COVID-19 pandemic, Vietnam’s inflation for 2020 is projected to fall between 3.5-3.9% to ensure social security and stabilise local people's lives, experts say.

The prediction has been made by the General Statistics Office (GSO) that believes that curbing the consumer price index (CPI) below 4% for the year is feasible. 

Statistics show the country’s CPI growth has slowed down despite enjoying a slight increase in recent months due to rising petrol prices, prompting the seven-month CPI to increase by 4.07% on-year.

Insiders believe that drastic measures are needed to rein in inflation at below 4% as planned in an effort to ensure social security and stabilise people’s lives amid the negative impact of the COVID-19 pandemic.

Most notably, prices of major products such as food, fruit and vegetables, especially pork, have been among the key factors that have seen the CPI increase since July, all of which have experienced a downward trend due to rising supply sources. 

However, petrol prices remain unpredictable as they are largely dependent on the global market. In addition, an increasing demand for learning materials ahead of the new academic year in September and consumer goods in the remaining months of the year shoulder the burden on the economy.

Still, the accelerated disbursement of public investment capital will certainly affect market prices in the second half of the year.

Nguyen Duc Do, deputy director of the Institute of Economics and Finance under the Ministry of Finance, predicts that demand for fuel is expected not to witness any sharp increases in the future, even in countries where the COVID-19 pandemic has been brought under control.

The price of crude oil is anticipated to hover around the US$40 per barrel mark and is unlikely to push up the CPI suddenly, Do analyses.

Nguyen Bich Lam, former GSO general director, points out this year’s CPI will remain under control as pork prices are anticipated not to rise further thanks to a sufficient supply, while petrol prices have already been affected by the impact of COVID-19.

Economist Ngo Tri Long proposes a number of synchronous and flexible solutions aimed at dealing with unpredictable and complicated developments in the global market, including the effective use of the petrol price stabilisation fund.

Incumbent GSO director Nguyen Thi Huong notes that a slowdown in the CPI is a positive signal that supports the government’s inflation controlling efforts, given the fact nearly 31 million employees have fallen victim to the COVID-19 pandemic.

“It is difficult for the economy to suffer a deep CPI shock as the demand of the society is not so high, the exchange rate between VND and foreign currencies is quite stable, and the income of the majority of employees is still limited,” says Huong.

The government has requested the Ministry of Finance and the State Bank of Vietnam to deploy a flexible fiscal and monetary policy in a bid to ensure macro stability, with a specific priority being given to curbing inflation and removing business hurdles, speeding up the disbursement of public investment capital, and accelerating future economic growth.

The government has also assigned the Ministry of Planning and Investment to draft the second relief package to iron out business snags and ensure social security.