With huge inflation pressure on the way in the remaining months of this year, a close watch must be kept on the prices of key products like oil and pork to hit the goal of keeping inflation below 4%, experts have said.

Close watch must be on  pork and oil prices to keep
inflation under control. (Photo: kinhtedothi.vn)

According to Nguyen Ba Minh, director of the Institute of Economics – Finance, two factors will weigh on inflation in the second half of this year. The first is the prices of commodities in the global market, which are forecast to increase as the COVID-19 pandemic is gradually contained and production and trade recover.

The second is natural disasters and diseases in Vietnam, such as African swine fever, drought, saltwater intrusion and extreme heat which would affect agricultural production as well as supply and demand of goods in the market.

Inflation is currently under considerable pressure and the consumer price index (CPI) jumped 0.66% in June against the previous month, the largest increase since 2016. However, Minh said the Government’s target of keeping inflation under 4% would be achievable, provided that price and market management policies are appropriate and timely.

In a recent conference on inflation forecast, Nguyen Duc Do, the institute’s Deputy Director, said pork and oil prices would need special attention.

Do cited analysis of the General Statistics Office that the increase of 68.2% in pork prices in the first half of this year pushed up the overall CPI by 2.86%. However, tumbling oil prices made up for the increase in pork prices, which helped the lower prices of the transport services category by 9.26%.

With the CPI expanding by 3.17% in the first half of this year, he said the CPI must be kept at below 0.6% per month till year-end to keep the CPI for the full year at 4%.

The target was achievable, Do said, adding that the Government must act to lower pork prices by importing pigs and promoting reproduction.

Vu Vinh Phu, chairman of the Hanoi Supermarkets Association, said if oil prices did not see significant increases in the second half of this year, forecast at about US$40 per barrel, lowering pork prices would help control inflation.

Phu urged the Government to have strict measures to handle unreasonable increases in pork prices.

Economic expert Ngo Chi Long, however, noted that price management and inflation control would be more difficult this year as the COVID-19 pandemic was weighing on the economy.

Risks existed, especially if the coronavirus were to start spreading in the country again, Long said, adding that caution in price management was vital. Long said it was also important to have a reasonable roadmap for a power price adjustment and increases in textbook prices.

The Government must also remove difficulties for businesses to accelerate economic growth, he added.

At a recent meeting with the Steering Committee on Price Management early this week, Prime Minister Nguyen Xuan Phuc insisted inflation must be kept under 4% this year without tightening fiscal and monetary policies to promote growth.