return icon Vietnamnet.vn

Rising petrol prices challenge inflation control efforts

The goal of maintaining inflation at 4% this year will be threatened unless viable solutions are introduced in a bid to rein in rapidly-increasing petrol prices, according to economic experts.
Retail petrol prices are expected to go up to nearly VND32,000 per litre on June 1, bringing to bear more pressure on inflation control efforts.

Petrol prices likely to approach VND32,000/litre

Statistics compiled by Singapore’s petroleum market updated by the Ministry of Industry and Trade indicate that fuel prices continued to increase sharply on May 27. Indeed, petrol RON92 and petrol RON95 were traded at US$146.08/barrel and US$154.26/barrel, respectively, while diesel was capped at US$149.49/barrel, all representing increases from US$146.32/barrel, US$150.32/barrel, and US$141.15/barrel recorded 10 days earlier.

In their price adjustments which are poised to take place on June 1 by the Ministry of Finance and the Ministry of Industry and Trade, the retail price of petrol in Vietnam is likely to rise by up to VND800/litre and will be close to VND32,000/litre. According to a petroleum trading business in Ho Chi Minh City, the domestic retail price of petrol is even projected to skyrocket to an all-time high of VND35,000/litre this year.

The General Statistics Office, while announcing major socio-economic indicators in May and the initial five months of the year on May 29, reported that the consumer price index (CPI) for May increased by more than 0.38% from the previous month, by 2.48% compared to December 2021, and by 2.86% over the same period last year. Together with food and essential commodities prices, rising prices of petrol can be viewed as a major reason behind the sharp increase in CPI.

Most notably, petrol products have experienced 13 price adjustments during the opening five months of the year, with the retail prices of petrol RON95, petrol E5 RON92, and diesel edging up by VND7,360 VND/litre, VND7,080/litre, and VND7,980/litre, respectively. On average, five-month petrol prices rose by 49.95% over the same period last year, prompting the overall CPI to climb by 1.8%.

Tax regulation can be an effective tool

Moving forward, petroleum prices are likely to rise over the coming months due to unpredictable oil market fluctuations resulting from the ongoing conflict in Ukraine. The Government has utililsed the petrol price stabilisation fund and axed the environmental protection tax in an attempt to cool down the domestic fuel market. However, the latest market developments indicate that without more radical solutions being introduced, the goal of controlling inflation and stabilising the macro-economy will be threatened by the sharp increase in petrol prices.

Trade expert Vu Vinh Phu forecasts that prices of consumer goods will increase by a further 15% to 17% ahead in the final two quarters of the year in the event that gasoline prices continue to increase in a consistent manner.

“The actual market prices have quietly increased much faster than estimated, and pressure will grow further when a higher basic wage is due to be applied this July. In order to control inflation, I think there is no alternative but to keep a tight grip on fuel prices,” says Phu.

Sharing this view, economic expert Ngo Tri Long points out the current difficulty in controlling petrol prices, explaining that tax reductions require the approval of the National Assembly, while the price stabilisation fund which can be used as an effective tool to cool down prices is running a deficit.

“In order to allay the increase in petrol prices, we have to reduce taxes and accept lower budget revenue in exchange for achieving the inflation control goal,” suggests Long.

Concurring with Long, Dr Vu Dinh Anh, another economic expert, suggests that the Government further reduce the excise tax, value-added tax, and environmental protection tax placed on petroleum.

“Taxes account for nearly 40% of the retail price of every litre of petrol, which is quite high. Therefore, the most suitable solution to lower fuel prices this time is to regulate and reduce taxes,” says Dr Anh.

Source: VOV

MORE NEWS

Two broken undersea cables linked to Vietnam to be fixed

Two among four broken undersea cables linked to Vietnam are scheduled to be fixed in March and April this year, reported the local media.

Northern region to see humid weather until April

The northern region of Vietnam will continue to experience humid weather until April, according to Nguyen Van Huong, head of the weather forecast division under the National Centre for Hydro-Meteorological Forecasting.

Vietnam works to ensure safer internet environment for all people

Deputy Minister of Information and Communications Nguyen Huy Dung emphasised the importance of a safe internet in the development process in Vietnam on the occasion of World Safer Internet Day 2023 (February 7).

Vietnamese striker Huynh Nhu performs well at Lank FC

On average, Vietnamese striker Huynh Nhu scores a goal every 122 minutes, ranking as the most effective striker for Lank Vilaverdense FC in the 2022-2023 football season.

PM Chinh’s Singapore, Brunei visits look toward cohesive ASEAN

Prime Minister Pham Minh Chinh’s upcoming official visits to Singapore and Brunei carry the message of joining hands for a cohesive ASEAN and a peaceful, stable, and prosperous Southeast Asia, Deputy Minister of Foreign Affairs Do Hung Viet said.

Driving training-testing establishments in 63 provinces to be inspected

The Ministry of Transport will set up three teams to inspect driver training and testing activities in 63 provinces and cities, expected to be completed by April 15.

Vietnam’s economy to “normalise” this year: VinaCapital

Investment management firm VinaCapital said it expects Vietnam’s economy and stock market to “normalise” this year after the COVID-19 pandemic.

Seven more Vietnamese officers to join UN peacekeeping mission in Africa

Seven officers received the Vietnamese State President's decision to join the United Nations peacekeeping mission in the Central African Republic, South Sudan and Abyei on February 7.

British naval patrol vessel pays friendly visit to HCM City

HMS Spey, the British Royal Navy’s offshore patrol vessel, anchored at Ho Chi Minh City’s port on February 7, beginning a five-day friendship visit to the city on the occasion of the 50th anniversary of diplomatic relations between the two countries.

Hoang Anh Gia La FC files  lawsuit against VPF

The People's Court of Nam Tu Liem District in Hanoi received a petition from Hoang Anh Gia Lai (HAGL) football club against the Vietnam Professional Football JSC (VPF).

Illegal fishing tackled with drastic measures to remove 'yellow card'

The Government, ministries and local authorities have been improving legal enforcement, supervision on the implementation of the law and traceability requirements through heavier fines on illegal fishing.

National water resources master plan looks to revive polluted rivers

Hanoi has treated water pollution at Nhue River, but the plan has not met the requirements. Meanwhile, urban area design plans along Lu and Set rivers in Thanh Xuan District are still under construction.

VIETNAM BUSINESS NEWS FEBRUARY 7/2023

Vietnam sets 2023 export target of US$394 billion

Trade ministry to support enterprises in boosting exports

The Trade Promotion Agency under the Ministry of Industry and Trade (MoIT) will collaborate with relevant agencies in carrying out measures to help enterprises expand their shares in foreign markets, said Vu Ba Phu, head of the agency.

Vietnam's textile industry faces headwinds in 2023 after poor results in Q4

After being heavily impacted by the COVID-19 pandemic, textile and garment enterprises have gradually recovered and were one of the key export industries that recorded extraordinary growth rates in the first months of 2022.
back_to_top