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

Inflation forecasts are under control

In the report at the meeting of Price Management Steering Committee to review the price management and administration and orient the price management for the remaining months of 2024 on April 24, the Ministry of Finance said that in the first months of the year, the market prices fluctuate in line with the annual rules. The prices increase in February due to coinciding with the New Year and Lunar New Year, and decrease in March. In April, the 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) increased by 3.77%, and core inflation rose 2.81%.

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

For example, petroleum product prices are forecast to fluctuate complicatedly under the movement of price, supply and demand in the world. The export rice prices may soon stabilize and increase again when the supply from major export markets has not showed signs of easing. Prices for shipping services by sea and surcharges for containerized goods at seaports are increasing sharply, putting pressure on businesses' costs...

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

The Ministry of Finance has updated three price management scenarios, and forecasted that the average CPI in 2024 will increase by about 3.64% compared to 2023 (the first scenario); increase by 4.05% (the second scenario) and increased by about 4.5% (the third scenario). The General Statistics Office forecasts the average CPI in the range of 3.8-4.5%. The State Bank predicts that average inflation in 2024 will increase in the range of 4.3% ± 0.5%.

According to estimates by the Ministry of Finance, if CPI in the remaining months of the year rises at the same rate compared to the previous month, the CPI in each month of the nine remaining months of the year will increase by about 0.26-0.39% to achieve the target of inflation control in 2024 in the range of 4-4.5%.

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

Deputy Minister of Planning and Investment Tran Quoc Phuong said that the forecasts are basically under control in line with the proposed scenario. However, the Deputy Minister voiced concern that the adjustment of prices for state-managed goods will affect the inflation, especially the application of new salary policies 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 sectors need to strictly monitor domestic market price fluctuations to propose appropriate, flexible and timely price management policies and scenarios; and promote information dissemination to avoid inflation expectations.

Ensuring supply and demand, and adjusting reasonable prices

Deputy Prime Minister Le Minh Khai, Head of the Price Management Steering Committee, highly appreciated the price management of ministries and sectors 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 still face great pressure.

To proactively respond to challenges in price management, the Deputy Prime Minister requested ministries and sectors to closely monitor local and external economic developments, and make detailed and specific forecasts of factors that impact the price level, especially essential goods and services to build detailed scenarios for each industry and field in line with the reality, thereby advising, proposing and implementing appropriate and effective price management solutions.

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

The Deputy Prime Minister requested ministries and sectors to adjust prices of essential goods and services in line with the application of new salary policies, ensuring inflation control in accordance with the target.

Based on the price management scenario, the ministries, sectors and localities need to prepare sufficient supplies of 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 follow the instructions of the Government and the Prime Minister on gold product management. First of all, we must ensure supply and demand and reasonable prices, and propose long-term solutions for managing gold products, both ensuring state management requirements and meeting the legitimate needs of people.

The Head of the Price Management Steering Committee suggested that agencies continue to promote communication, ensuring timeliness, transparency and honesty of price information and adjustment. Ministries and sectors need focus on building and perfecting mechanisms and policies related to price laws; continue to research and propose solutions related to taxes and fees to support people and businesses; and implement monetary policy effectively.