Dr. Nguyen Duc Do, Deputy Director of the Institute of Economics and Finance (Academy of Finance).

The market prices of some products in the first months of the year tend to increase. In your opinion, will this become a trend for the whole year 2024 ?

The price management and inflation control in the first months of the year continued to face pressures from the external economy. The domestic market tends to increase due to the high demand in holidays, similar to the previous years. However, the consumer price index (CPI) or inflation control in recent months is still below the target when on average in the first four months of 2024, CPI increased by 3.93% year-on-year, and core inflation increased by 2.81%, lower than the target of controlling inflation at below 4.5%.

In my opinion, the market price is on an upward trend in the first half months of the year and will gradually decrease in the second half months of the yearwhen the prices of some essential goods may not increase. In addition, if the US economic situation falls into recession, oil prices will plummet, exchange rates will also go down... thereby reducing pressure on domestic inflation control. If at the beginning of the year, I forecast that CPI would increase by an average of 3% (±0.5%) in 2024, up to now I still forecast at 3-3.5% on average for the whole year 2024, which is not much change compared with the previous time.

How do you assess the pressures on CPI and inflation from the increases in base salary, price adjustments of some essential goods or impacts from monetary policy?

The adjustment to increase the base salary from July 1 is to rise the salary for the state sector, the number of beneficiaries is not too large, so the impact on CPI is not much. In theory, the increase in wages may lead to the increase in prices, but the impact is still low as well as market expectations need to betaken into account.

Currently, the core inflation level is still below 3%. If the price of state-managed goods such as medical services, education... is revised up in the near future, the core inflation will be at the average inflation level. However, the price adjustment of state-managed products need to be appropriate and have plans and roadmap for the adjustment, so competent authorities will adjust the price at the end of the year.

Moreover, we only can clearly assess the domestic and foreign economic situation, commodity price trends,and forecast GDP growth rate or inflation control index of the whole year, thereby making appropriate calculations and price adjustment scenarios.

Regarding monetary policy, the three factors that affect inflation are supply growth, interest rates, and exchange rates. Recently, domestic gold prices have surged but have not had much impact on inflation. If the gold supply lacks, leading to the need to import gold, it may affect the exchange rate on the free market, and if the exchange rate at commercial banks increases, it is usually due to other reasons.

Currently, the period of high domestic exchange rates has passed, the USD index in the international market has revised down when the UE economy slows down, the US Federal Reserve (FED) may increase interest rates, leading to the sharp increase in the domestic exchange rate in the coming time.

Currently, some commercial banks have adjusted deposit interest rates but at the slight increase and mainly for short term due to that the State Bank sells bills to control exchange rates, leading to the increase in interbank interest rates and affecting banks that borrow many times, thereby affecting deposit interest rates. This increase is not high and if monetary policy has an impact, there will be a certain delay. It still needs to be monitored to have appropriate solutions to control CPI and inflation.

Recently, the Government has requested to soon submit to competent authorities policies on exemption, reduction, and extension of taxes, fees, and charges; and required to reduce the Value-added tax rate by 2% for some groups of goods and services in the last 6 months of 2024. In your opinion, if these policies are approved, how will they impact CPI and control inflation?

Exemption, reduction, and extension of taxes, fees, and charges to support businesses and people are always expected because they will help reduce many costs in life, production and business. Therefore, if these policies continue to be implemented, they will create motivation and support economic activities, promote consumption. However, the level of impact on the CPI or inflation control still needs to be calculated because it depends on many factors from the external context.

In your opinion, what is solution to control inflation expectations?

In reality, inflation expectations have been built and formed over many years, and can not be changed immediately when there are new policies or new information about price adjustments. Meanwhile, Vietnam's inflation control has always been below 4% for many years, so people's inflation expectations are not high. But this issue needs to be paid attention; the authorities need to promote price transparency and price management to help stabilize the psychology of consumers and businesses and control inflation expectations...

Thank you Sir!