VINACHEM

It was suggested at a workshop in Ha Noi on Tuesday that the Government continue implementing measures such as monetary and financial tightening policies in combination with market controls as required by Resolution 11.

"Keeping the consumer price index (CPI) at 15 per cent in the second half of the year would mean increasing the current CPI by only 1.71 per cent as the domestic market has been affected by both inner and outer factors," Deputy Head of the Ministry of Industry anmd Trade's Domestic Market Department, Nguyen Loc An, said.

Figures from the General Statistics Office (GSO) have shown that during the first half of the year, the CPI rose by 16.03 per cent over the same period last year and more than 13 per cent in comparison with last December.

The GSO report confirmed that the price of some foods had more than doubled, the average price of pork in Ha Noi having risen from VND70,000 (US$3.4) to VND110,000 ($5.3) per kilo within the last 12 months.

According to An, although several factors had lead to rising prices, Resolution 11 has contributed, to some extent, to decelerating the speed of CPI increase.

"The prices of world market goods will continue to increase until the end of the year, offering little chance for full recovery with electricity prices expected to increase in order to make up for production costs," An said, adding that goods prices would rise during the coming flood and storm seasons.

He added that some positive factors could limit the increase of crude oil prices on the world market while increasing food supply and reducing interest.

"Positive factors coupled with the strict implementation of Resolution 11 could help bring the CPI down to 17 per cent this year," An said.

Director of the Finance Ministry's Pricing Department, Nguyen Tien Thoa, said that the prices of some goods would be continually adjusted under State management.

"It could be quite difficult to reduce inflation very quickly seeing as the current situation has been caused by the inherent economical shortcomings of several years," Thoa said, adding that the Government should draw up a roadmap for adjusting prices in order to avoid economical shock.

"In the long-term, the economy has to be restructured in such a way so as to ensure social security," he said.

Head of the Economics Department at the Ha Noi Institute for Social Development Studies, Nguyen Minh Phong, said that the factors causing an increase in prices included the decreased supply of goods, especially foods, the sudden increase in agricultural product demand by Chinese businesses and a weak distribution system

"Authorities urgently need to increase supply, reduce demand and strictly control distribution channels in order to ensure stability between purchase and sales prices," Phong said.

Vu Vinh Phu, chairman of the Ha Noi Supermarket Association, agreed that the Government should ensure competitive market mechanisms and proper distribution channels to deliver goods directly to consumers.

"The country's distribution system is inadequate. It pushes prices up while affording producers little profit and unreasonable prices to customers," he said.

According to Phu, smuggling, trade fraud and counterfeiting should be appropriately punished in order to better manage the market.

Deputy Director of the Finance Institute, Pham Van Dang, added that the Government should find effective solutions to curbing inflation during the next few years to ensure stable long-term development. — VNS