Economic experts have had high expectations of the Prime Minister’s directive and the Ministry of Finance measures to curb price hikes. It is forecast that the consumer price index (CPI) in September increased by only 0.3 percent.
However, in fact, the CPI in September rose to 0.51 percent, much higher than the predictions from the local market regulating team at the end of August.
The prices of ten key goods continued to rise sharply, especially food (1.26 percent), pharmaceuticals (0.91 percent), gas (VND10,000 per bottle), imported milk (30 percent).
The sharp increase in the price of milk is attributed to the rise in the material price, which accounts for up to 56-91 percent of cost price, according to deputy head of the Price Management Department, Vu Cong Chinh.
In addition, the advertising costs of milk companies remain high. For example, 20 percent of Dutch Lay’s costs are spent on advertising activities.
In the Hanoi market, the prices of beef, pork, and chicken have increased from VND7,000 -10,000 per kilo, and vegetables are up by 20-30 percent. The price hikes in food make it difficult for housewives to prepare meals for their families.
Mrs Pham Thu Ha, who lives in Nguyen An Ninh street, Hanoi said “Previously, I spent only VND35,000-40,000 on buying food but now I have to spend at least VND50,000.”
Meanwhile, steel prices are always considered “hot” among construction materials. Currently, steel prices have climbed to VND12 million per tonne, VND350,000 higher than in early September.
Experts forecast that steel prices will continue to rise as it depends a lot on imported steel ingots, especially Chinese steel ingots.
According to rumours, China will soon increase the export tax on steel ingots by 25 percent. If this becomes true steel prices will hit a record high of VND14 million per tonne.
Pham Chi Cuong, chairman of the Vietnam Steel Association, said that Vietnam will have to come to terms with this as in recent times China has cut down its steel production by 20 million tonnes. Meanwhile in other markets such as Eastern Europe and Northern America steel prices have risen quickly.
Although the Government has devised strict measures to control CPI it has gradually increased. Economic experts said that despite timely Government’s measures, they could not control the “material price storm” on the world market as local producers depend a lot on imported materials.
Hoang Tho Xuan, head of the Domestic Market Policy Department of the Ministry of Industry and Trade, said that in addition to increases in the cost of output materials, in recent times, labour costs, salaries and production cost have gone up.
To control CPI hikes in remaining months of this year the relevant agencies should check the prices of imported materials and ask customs to provide a detailed report on importers as well as imported products since the decree to cut import taxes came into effect.
The market development has demonstrated how difficult it is to calculate the CPI. In the first nine months of this year, it already rose by 7.32 percent. If consumer prices in October continue to increase by 0.4 percent, the CPI for the whole year will surpass 8.2 percent.