Controlling price hikes

The Consumer Price Index (CPI) in the past seven months has risen to 14.6 percent, threatening the government’s set target of 17 percent for the whole year.

It is predicted that the CPI in August will continue to rise despite efforts to put a hold on the soaring prices of goods in the last four months. So what should be done to control them in the remaining months of the year?

Nguyen Tien Thoa, head of the Price Management Department under the Ministry of Finance, says that it is necessary to iron out snags in production and trading.

In his view, the supply of goods will run into difficulties in the remaining months of the year. Judging from the current challenges to the world economy, it is not easy to import basic materials for domestic production with inflation threatening to rear its ugly head in many countries and there will be price hikes on both foreign and local markets.

In Vietnam, Thoa argues, high cost of input materials, soaring interest rates, natural calamities, and epidemics have had a negative impact on production and business operations. However, the demand for consumer goods and services tend to increase sharply in the last months before the Lunar New Year Festival.

It is not right when some people claim there is no agency to control price hikes. In fact, the Ministry of Finance, financial departments and local authorities have closely co-ordinated with inspection agencies to check the price listing and prevent unreasonable adjustments on the market.

Thoa proposes some measures to control the prices of essential goods in the coming time as follows:

Firstly, we should monitor the supply-demand situation in the local market to prevent the shortage of food and other essentials. It is necessary to transfer goods from areas which have an abundant supply to provinces and cities which are running short of goods.

Secondly, it is also important to help businesses through a difficult time by way of providing loans for them to expand operations and supplies to the market.

Thirdly, local authorities should continue with their programmes to stabilize prices, offer discounts and control the prices of essential goods.

Fourthly, there should be strict controls on the market to prevent speculative activity.

Nguyen Loc An, deputy head of the Domestic Market Department under the Ministry of Industry and Trade (MoIT), says his ministry is joining efforts with the Ministry of Agriculture and Rural Development (MARD) to ensure the balance between supply and demand. One of temporary measures taken by the two ministries is to transport pork products from the south to the north. 

In the long run, localities are required to ensure the regular supply of pork and poultry products to the market. In addition, they should disseminate information on green vegetables and adjust plans for cultivation.

The MoIT is planning on compulsory circulation of essential goods and will submit its draft proposal to the Prime Minister.

One virtue is that apart from providing goods to the market in a timely manner, compulsory circulation will help control price hikes and speculative activity on the market.

In the context of international economic integration, we do not ban foreign businesses from purchasing Vietnamese goods. If there is no competition, farmers will suffer losses under the pressure of “price gauging” by a small number of businesses.

Therefore, to create a healthy market and ensure the interests for farmers, the MoIT should continue to promote agricultural production, seek new outlets and create favourable conditions for them to sign long-term contracts with businesses.

Nguyen Minh Phong, an economic expert, emphasizes the need to develop both retail and wholesale systems to keep the prices of food and foodstuff product from rising. These items usually make up more than 39 percent of the CPI. And price hikes in food and foodstuffs will lead to a sharp increase in the CPI.

It is very essential to map out a strategy for development of a national retail and wholesale network linking producers to consumers across the country.