Inflation in 2020 can be controlled below 4%

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The goal of controlling inflation below 4.0% can be achieved if food prices are controlled. Photo: H. Anh

Inflation in second quarter will be lower than in first quarter

At aseminar to publish the first quarter macroeconomic report held by the Institute of Economic and Policy Research recently, representative of VEPR, Assoc.Prof. Dr. Pham The Anh said that the average CPI in the first quarter of 2020 compared to the same period in 2019 increased by 5.56%. After a sharp increase since the third quarter of 2019, consumer prices began to decline from February 2020.

Predicting inflation in the second quarter, Assoc. Prof. Dr. Pham The Anh, Chief Economist of VEPR said that, with the current situation of the world and domestic economy, the demand for shopping and consuming goods decreased, raw material prices for commodity production also dropped, so average inflation in the second quarter of 2020 is likely to be lower than in the first quarter.

Commenting on inflation in 2020, Assoc.Prof. Pham TheAnh said that there was almost no risk of demand-pull inflation, the risk from the exchange rate is low, while the risk from supply disruption (food) increased.

"The goal of controlling inflation below 4.0% can be achieved if food prices are controlled," the VEPR representative said.

The General Department of Statistics also said that the reason for the CPI increase in the first quarter of 2020 is due to the increase of many food items, especially the rising price of pork, constantly setting new price ground. The decline of pork prices will contribute to good control of CPI.

Reportedly, to control the CPI, the Government has directed the import of pork to reduce domestic pork prices. However, according to the actual survey, the price of pork at markets and supermarkets has not decreased as per the Government's target.

Recently, forecasts of economic growth and Vietnam's CPI, although it is given that inflationary pressures are forecast to increase temporarily, this reflects uncertainty about food, fuel and food prices, as well as the possibility of trade disruption, but the World Bank forecasts that Vietnam's inflation in 2020 will be only 3.5%.

Falling oil prices support inflation control

Regarding this issue, economist Nguyen Duc Hung Linh said that if compared to 2009 or 2012, Vietnam has more advantages to stabilize the macro economy, even enough resources to promote growth and one of the advantages emphasized by this expert is low inflation.

The expert also said that oil prices have fallen deeply, pork prices are likely to be reduced thanks to the control of African swine feverand the Government's determination.

“Food and fuel are the two commodity groups that have a great impact on the CPI so the CPI in 2020 will definitely go down. Low inflation is an important premise for reducing interest rates to support growth. Besides, monetary policy in the past two terms can be said to be much more effective than previously. In 2008 and 2011, galloping inflation was mainly caused by the mistake of monetary policy because the credit increased sharply and lacked orientation,”said Nguyen Duc Hung Linh.

In this regard, experts of BIDV Training and Research Institute have just released a report saying from the beginning of 2020, the world oil price has dropped by over 60%, having many impacts on the global economy – both positive and negative.

For Vietnam, the reduction of world oil prices contributes to reducing production costs for businesses and consumers, thereby stimulating investment and consumption, while saving foreign currency for imports of gasoline, helping control inflation and stabilize the macro-economy.

“Gasoline prices fall, reducing pressure on inflation, contributing to macroeconomic stability. The sharp drop in oil prices has a direct impact on transport and utility services, fuel, construction materials, etc., thereby reducing the pressure on the CPI. Average CPI in the first quarter of 2020 increased by 5.56% over the same period last year, the highest level in five years. Therefore, the reduction of petrol and oil prices will contribute to reduce the pressure on inflation, contribute to macroeconomic stability,"said the BIDV Institute of Training and Research.