Warning about rising inflation

Monday, 2022-01-03 12:02:08
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Illustrative image (Photo: Nguyet Anh)
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NDO - Inflation is currently a worrisome factor amid the efforts to recover the world economy in general and that of Vietnam in particular.

Many major economies have implemented solutions to ease inflation, after launching unprecedented support packages to stimulate the economy amid the impacts of the COVID-19 pandemic.

Vietnam's major trading and investment partners are facing risks of the highest inflation in several decades. This means that Vietnam has the risk of importing inflation, because of the large openness of the economy and the dependence on the import of input materials.

Notably, the increasing prices of essential raw materials such as gasoline, iron and steel can create a strong spillover factor because they are input materials for many domestic industries.

The good coordination between macroeconomic management and price management has helped Vietnam continue to maintain economic stability, control inflation at a low level, and create motivation to support economic recovery and promote growth.

However, the control of inflation in 2021 below the set target cannot fully assess the situation because the low inflation is Vietnam is mainly due to low consumption demand but not low prices.

The COVID-19 pandemic has caused difficulties for production, supply and circulation chains and incurred more operating costs for businesses. When the economy recovers, a number of businesses will not be unable to immediately return to their previous production scale, which may lead to shortages of supply, causing an increase in commodity prices. Businesses must also pay more for recruiting and training workers because of the shortage of personnel after the pandemic.

2022 is also the time when prices of some essential goods and services are adjusted up according to the roadmap, while the prices of goods reduced as directed by the State to support consumers during the pandemic outbreak are no longer eligible for support policies, such as electricity, domestic water, and telecommunications.

The economic recovery programme with a very large scale is expected to be launched which will create a certain impact on non-performing loans, national public debt, and inflation.

In 2022, authorities need to closely monitor price movements and inflation levels in the world to provide timely warnings about the risk to domestic price levels in order to focus on controlling inflation and supporting economic recovery and growth.

It is necessary to review and evaluate products that are likely to suffer from long-term shortages in order to prepare appropriate policies, including researching and increasing alternative production capacity and avoiding dependence on imported raw materials.

Authorised agencies also need to proactively prepare solutions to promote production and business, ensure the supply and circulation of goods, provide complete and correct information about price management, and not let inflation increase due to psychology.