Dr Dinh Trong Thinh: Eight ways to limit CPI increase below 4%

DNHN - Assoc. Dinh Trong Thinh stated that further decreasing the inflation rate is required to keep the CPI growth rate below 4%, as set by the National Assembly, and to develop strategies to stabilize the financial and monetary markets.

Continuing to promote the prevention of the Covid-19 outbreak with new variations that can re-emerge and prevent other illnesses will be an excellent starting point for stabilizing production, the market, and pricing.

Mr Dinh Trong Thinh stated, "This will be a requirement for economic development and stability in 2022."

Continue to preserve macroeconomic stability, limit inflation, maintain important balances, and establish the groundwork for the economy's recovery and long-term growth. GDP growth in the second quarter of 2022 grew by 7.72% over the same period last year, exceeding the rate of growth in the second quarter of the years 2011-2021.

According to Assoc. Dinh Trong Thinh, economic growth will be an effective support element for stabilizing the economy, assisting in avoiding corporate and public scepticism and a scenario of "psychological inflation."

The State Bank should continue to closely monitor global economic and financial market fluctuations, take the initiative, implement flexible interest rate management, open market tools, and actively manage interest and adjust the exchange rate flexibly, in line with the development of the economy, gradually stabilizing and raising the value of the Vietnamese dong, and contributing to keeping core inflation as a basis for controlling inflation to kee (CPI).

To mitigate inflationary pressures in the last months of the year, the State Bank should check and oversee the money supply regularly, increase credit, and regulate interest rates and currency rates flexibly.

"Money supply has risen in the past; credit expanded by 9.5% in the first eight months of 2022." "The potential to accelerate the circulation of money after the outbreak is under control is another factor that must be considered when evaluating the likelihood of excessive inflation," Dinh Trong Thinh added.

The Ministry of Finance must carefully consider the economy's needs and capacity to absorb capital, as well as the extent, term, form, and method of mobilizing public debt, to ensure both stimulus for rapid economic recovery and development, as well as the effective use of loans, loan repayment capacity, and the economy's long-term stability and development.

The Ministry of Industry and Trade's General Department of Market Management and the Ministry of Finance's Price Management Department must strengthen inspection and supervision of price and market activities to avoid the situation of "dropping water in the rain" of some subjects, particularly with essential goods and services, goods, equipment, and medical supplies for disease prevention and control, ensuring price stability.

"Last time, the price of gasoline dropped by more than 25%, while the prices of many other things remained the same or even climbed." It is critical to implement stabilization measures as quickly as possible to bring item pricing back into line. The Government, the Ministry of Finance, and the State Bank, in particular, should actively monitor changes in both the real estate and stock markets to avoid circumstances that might harm the market. "Monetary finance and inflation," remarked one expert.

The execution of the Government's plan of Decree No. 86/2015/ND-CP dated October 2, 2015, in some locations at the beginning of the school year 2022-2023 after deferring the rise due to the Covid-19 pandemic would lead to an increase in the CPI. The implementation of Decree No. 60/2021/ND-CP on the autonomous mechanism of public non-business entities may increase the cost of public services. According to Assoc. Dr Dinh Trong Thinh, many colleges are considering raising tuition for the upcoming school year, which might be a factor driving up inflation.

It is critical to effectively disseminate and enforce rules governing price transparency and publicity, particularly for price stabilization products, items on the list of price disclosures, and government goods and services. The government sets prices, avoids inflation expectations, prevents false rumours that generate psychological confusion, and hurts the price level of particular commodities and the economy's price level.

"It is critical to let businesses and people understand that continuing to strive to maintain commodity prices high would result in high input costs for production, a cycle of price rises, and high inflation will destroy firms' and people's actual income," the expert added.

The next step is to thoroughly review the price-forming elements for price-stabilizing commodities, items on the list of price declarations, and goods and services priced by the state, to avoid adjustment prices and unjustifiable price hikes. For products with a price rise schedule, it is vital to precisely establish the amount and time of implementation, avoiding the coincidence of periods that can bring substantial swings to the price level of the economy.

PV