Price increases stopped by drastic measures

he prices of food, poultry meat, seafood and dairy products have been stabilised, while the prices of steel, import cars and electric products have been decreasing in some areas.

Regarding food prices, though rice exporters are trying to collect rice to fulfill signed export contracts, the rice price has still decreased by VND50-100/kg thanks to the superfluous supply, now selling at VND4,600-5,200/kg.

However, as the Ministry of Industry and Trade has forecast, as the northern region has entered the rainy and storm season, while floods threaten the south, the food price is expected to increase slightly in some areas.

Meanwhile, foodstuff prices are tending to slightly decrease thanks to superfluous supply. The price of pork, for example, saw a slight decrease in August after increasing sharply in July, now selling at VND19-23,000/kg in the north, and VND19-25,000/kg in the south.

The prices of beef, poultry meat, and seafood, seeing increases of VND2-4,000/kg in early August, have slightly decreased. Beef is selling at VND75-90,000/kg. Chicken bred in industrial farms is selling at VND35,000/kg, while chicken bred at households is selling at VND58-60,000/kg. In the Mekong River Delta, tra fish price reduced by VND500-600/kg, now selling at VND13,400/kg on average.

At the end of July and in early August, imported dairy products saw sharp price increases of VND20-96,000/unit. The decision to cut taxes on dairy products has helped prevent further increases, but has not helped reduce selling prices.

Nguyen Tien Thoa, Head of the Price Control Department under the Ministry of Finance, said that the 3-week inspection tours of steel mills, gas and dairy producers, the products that saw biggest price increases over the last time, was nearly finished, and the results would be announced in some days.

Regarding construction material prices, the Ministry of Industry and Trade (MIT) said that the prices would be stable until the end of the year thanks to big stocks.

Some 3mil tonnes of cement were consumed in August despite the rainy season, raising the total consumption level of cement to 23.3mil tonnes. The price is hovering between VND760-800,000/tonne in the north, and VND878-900,000 in the south. The volume of cement in stock is 2.21mil tonnes, which, together with local production, will ensure adequate supply for the market, and no price fever is expected to occur.

As for construction steel, Vietnamese steel producers now tend to purchase ingot steel from Malaysia and Thailand due to the limited supply from China. The steel price is VND9,550-9,900/kg now, down by VND300/kg over the previous month.

Also according to MIT, after the decision to reduce petrol price by VND500/litre, petrol distributors still can make profit of 9.6% of CIF price, while they are incurring heavy losses with diesel (VND1,488/litre) and kerosene (VND1,376/litre).

MIT has predicted the CPI growth rate of 0.2-0.3% for September, saying that the high purchasing power on the National Day holiday, the opening of the new academic year and Mid-Autumn festival will be the factors that can push up prices.

Also in an effort to curb the price increases, the central bank has announced it will continuously use the open market operations to withdraw cash from circulation. Since mid August 2007, the central bank has offered to sell bonds on all working days. Besides the 1-month, 2-month, 3-month, 6-month, 9-month and 12-month term, the central bank has offered 4-month and 5-month term bonds as well.

Source: VNE