The government will maintain the cautious and tight monetary policy in the second half of 2011 to rein in inflation, Prime Minister Nguyen Tan Dung stressed at a regular cabinet meeting on Sunday.
Curbing inflation, achieving macroeconomic stability and ensuring social welfare will continue to be top priorities for the last six months, Mr. Dung said.
Vietnam’s consumer price index (CPI) in July rose 1.2 percent from last month, the General Statistics Office said in a report on its website last week.
CPI is expected to rise 20.82 percent this month compared with June last year, the office said.
Prices have risen every month since August 2010, although inflation is still below a recent peak of 28.3 percent recorded in August 2008, and far from the triple-digit figures seen in the 1980s.
The government will continue to keep lending growth under 20 percent and reduce credit to property and stock investments, Nguyen Dong Tien, vice governor of the State Bank of Vietnam, said at a press briefing after the session.
“Inflation is expected to remain unpredictable in upcoming time. Therefore, the state bank will continue to tighten credit to non-production sector,” Tien said.
Food prices is the main key drivers of the increasing CPI this month, said Nguyen Tien Thoa, head of the Price Management Department of the Ministry of Finance.
Food is getting expensive on the rising input cost and shortage of vegetables, which are caused by typhoons, according to Thoa.
He noticed that foreign traders’ recent agricultural products purchases have resulted in no impact on the increase in domestic food prices.
“Statistics from the Ministry of Agriculture and Rural Development show foreign traders bought not too much foodstuffs, only around 20,000 pigs in the first three months of the year” said Thoa.
“The buying got weaker in the last three months. However, pig import is getting stronger now.”
He also warned that without a state subsidy fund, the government will struggle to cope with global crude oil price, which has been rising sharply since March.
The Ministry of Finance has submitted the government’s approval to manage the domestic gasoline price under the market mechanism, said deputy minister Nguyen Cong Nghiep.
“CPI already reached 14.6 percent this month. Thus we will hardly keep it at this year’s target of 17 percent,” Thoa said at the press briefing.
“Inflation worldwide is very high. Therefore curbing inflation remains among the government’s top priorities. This year’s CPI is very unpredictable since gold and crude oil keep moving up,” said Nguyen Xuan Phuc, head of the Government Office.
