Inflation imports do not occur in 2021, which become a cumulative factor that has a less positive impact on inflation this year.
Import inflation occurs when the price of imports (the price of goods purchased from abroad) and the exchange rate increase simultaneously or only by one factor. Signs of import inflation have appeared quite clearly when import turnover in the first 2 months of the year increased by 15.9% over the same period last year while the quantity of imported goods showed signs of decreasing, such as iron and steel. , iron and steel scrap, coal, liquefied petroleum gas, plastic raw materials, cashew nuts, coal, etc.
Crude oil and food prices soar
Although there are no official statistics on the import price of each item from the markets, many analyzes show that the high import turnover has an important cause due to the increase in import prices, not entirely due to the quantity. Even, the quantity of imported goods for domestic production not only did not increase but also showed signs of decreasing, for example: scrap iron and steel, cashew nuts, coal, liquefied petroleum gas, iron and steel, metal other common, etc.
According to the General Statistics Office, the industrial production index in the first two months of this year slowed down compared to the same period last year, showing that the demand for raw materials for production is not high. Specifically, in the first two months of the year, the industrial production index was estimated to increase by 5.4% over the same period last year, quite low compared to the increase of 6.8% in 2021. , the increase in the industrial production index decreased compared with the increase of both the previous month and the same period last year.
On the world market, prices of many commodities continued to rise. According to the Food and Agriculture Organization of the United Nations (FAO), the food price index (FFPI) in February increased by 140.7 points, corresponding to an increase of 3.9% over the previous month and an increase of 24.1% over the same period. period last year. This index is 3.1 points higher than the previous record recorded in February-2011. Besides, crude oil and gas prices continued to escalate and showed no sign of stopping due to negative impacts from the tension between Russia and Ukraine.
Economic expert – Dr. Vu Dinh Anh said that although the tension between Russia and Ukraine has a little direct impact on Vietnam’s economy, it is an indirect factor that negatively affects Vietnam’s trade with many foreign partners. cooperation in the world, leading to the risk of high import inflation. The reason is that the political-military situation between Russia and Ukraine and sanctions from the US, Europe and Russia will affect at least two important markets, namely fuel, basic raw materials and market. food school.
“Crude oil prices and food prices have increased very high in 2021 and continued to increase strongly since the beginning of this year. Russia currently accounts for 70% of fertilizer supply in the world market while Vietnam imports 100% of NPK fertilizers. Therefore, no matter which country it imports fertilizers from, it is difficult for Vietnam to avoid the effect of increasing import prices.
As for the gas market, the move from the US may affect the supply somewhat. But the problem here is that without Russia supplying oil, there will be supply from other countries, but the price will certainly be pushed up even higher,” said Dr. Vu Dinh Anh.
Soon synchronous control solution
According to Dr. Vu Dinh Anh, inflation import did not happen in 2021 thanks to many effective macro-balancing and control policies of the Government but may become a cumulative factor pushing to 2022. Vietnam’s biggest pressure at the moment is to control imports of inflation to avoid having a negative impact on inflation” – Dr. Anh acknowledged.
According to Dr. Le Quoc Phuong, former Deputy Director of the Center for Industry and Trade Information – Ministry of Industry and Trade, although the abundant supply of goods and a stable macro background will create room for inflation control, Loosening monetary and fiscal policies to support economic recovery and possible increase in domestic demand will adversely affect inflation.
“On the other hand, in 2021, although the import price will increase, the VND/USD exchange rate will decrease, so the risk of import inflation has been partly prevented. This year, the exchange rate will hardly continue to decrease, maybe even increase by 1 %-2% making import prices double from two factors: increasing market price and weakening VND. This will have a significant impact on inflation, especially on the psychology of inflation expectations”, Le Quoc Phuong is concerned.
In order to respond early to the risk of imported inflation, experts note the need for a comprehensive and synchronous solution. Regarding exports, it is necessary to overcome the weakness of supporting industries, the status of processing and assembling with low added value; increase export output with high-priced products to take advantage of, such as cashew nuts, pepper, coal, crude oil, textile fibers, iron and steel, etc.
Regarding imports, it is necessary to control the origin of goods to prevent the situation of “household export”; have a plan to replace the market or use domestic products with a number of imported goods with sharp price increases, such as soybeans, fertilizers, rubber products, etc.