VietNamNet Bridge – Economists have warned that the inflation is getting closer to the two-digit threshold, emphasizing that high inflation has always been the biggest headache for Vietnam.

Nguyen Minh Phong, a well-known economist, said at recent workshop on the macroeconomic performance in Vietnam, that the government should strive to the “one-digit inflation rate” target rather than cherishing the ambitious plan of curbing the inflation rate at 7.5 percent.

“I think the 9 percent inflation rate should be a more feasible goal,” Phong said.

Phong’s prediction was given one day after the General Statistics Office announced that the consumer price index (CPI) in September 2012 increased by 2.2 percent over the month before, and by 5.13 percent over December 2011.

The CPI increased by 6.48 percent in comparison with the same period of the last year and 9.96 percent in the first nine months of 2012.

Phong has noted that the current conditions all support the CPI increase, including the domestic policy on loosening the monetary policy and a series of bailout packages released by the big economies in the world.

“The CPI index would much depend on the government’s efforts to control the petroleum prices and the prices of other state-controlled goods, such as electricity and water.

The report released on September 24 by JP Morgan Chase, has also commented that the CPI increase in September was higher than thought. Prior to that, the CPI only increased by 0.2 percent a month only in the last eight consecutive months, according to Thoi bao Kinh te Saigon.

Therefore, the finance institution believes that the inflation rate in Vietnam is marching towards the 9 percent threshold by the end of the year.

One month ago, economists kept optimistic about the feasibility of controlling the inflation of the government. The slow CPI increases in the months before made experts think that the inflation rate would be 7.5 percent this year, which means that the CPI would increase very slightly by one percent a month in the last four months of the year.

However, the forecasts could not come true due to the sharp increases of gas, electricity, educational products and healthcare services.

It is expected that big sums of money would be disbursed every month for pubic investment projects in an effort to fulfill the plan of the 2012 fiscal year. Therefore, experts say they cannot see any opportunities to slash the interest rates further in the time to come.

The unexpected arising factors have made all the economic scenarios out of date.

In May 2012, the economics policy center under the Hanoi National Economics University released two economic scenarios for 2012. In the low scenario, the CPI increase and GDP growth rate were 4.6 percent and 4.4 percent, respectively. The figures were 6.2 percent and 5.1 percent for high scenario.

In early August 2012, the National Finance Supervision Council suggested that the government should set up the ceiling CPI target at six percent, and that CPI should increase by 0.5-0.8 percent a month only in the fourth quarter of 2012.

The forecasted inflation rates have been increasing day after day. Most recently, Dr Vo Tri Thanh, Deputy Head of the Central Institute for Economic Management CIEM, predicted that the inflation rate would be 7.5-8 percent by the end of the year. Thanh also thinks that the inflation rate would be one percent a month in the last four months of the year.

Do Thuc, Director of the General Statistics Office, admitting that the sharp rise of the CPI increase in September, said no one could imagine before that the increases of healthcare fees and tuitions would have such a serious impact on the society’s life.

Compiled by Thanh Mai