Inflationary pressure as prices of inputs surge in 2021

A recent online survey by VnExpress of over 23,000 readers found inflation to be one of 10 economic changes in 2021 that affected them most.

92 percent of respondents say they are affected by inflation pressure with higher prices of products in 2021.

Since early 2021 there have been at least three waves of price hikes.

According to the General Statistics Office, in January the consumer price index (CPI) rose by only 0.66 percent, but in May, after the fourth wave of Covid-19 had broken out, the prices of many raw materials and goods started increasing sharply.

Truong Chi Thien, general director of Vinh Thanh Dat Food Corporation, said poultry farms made losses on eggs because animal feed prices had gone up by 30 percent.

Feedstock used in the steel and woodwork industries rose 20-30 percent.

In August, when the pandemic reached its peak in HCMC, the prices of raw materials and finished goods increased again.

By late August the prices of gasoline were up 28 percent for the year, and the Vietnam Institute for Economic and Policy Research said agricultural input prices had risen by 6 percent and industrial feedstock by 11 percent.

When HCMC imposed stringent Covid restrictions on the movement of people and vehicles, the prices of many goods rose by 50 percent, and some even by 100 percent.

In late October, after HCMC reopened, many businesses stepped up production but quickly ran out of raw materials and feedstock. With demand overwhelming supply, their prices skyrocketed, many by 100 percent.

Bui Thanh Tung, vice general director of Kido Group Corporation, said vegetable oil prices have increased sharply over the past nine months due to tight global supply and high demand. From VND14,000 ($0.6) a few months ago the price of a kilogram has gone up to VND32,000 now.

Le Xuan Huy, vice general director of CP Vietnam Corporation, said prices of raw materials for animal feed production have risen by 60-70 percent this year, leading to an increase of nearly 40 percent in pork prices.

Due to higher gasoline prices, with RON95 surging to nearly VND25,000 per liter, the highest level in the last seven years, transport costs increased by 30 percent by late 2021.

Prices of many other inputs and raw materials like fertilizers, gas, cooking oil and seafood also increased sharply.

VnDirect Securities Corporation forecast prices to continue to climb in 2022. However, the prices of agricultural goods are expected to decline slightly next year as supply improves.

Vietnam’s Consumer Price Index (CPI), which measures inflation, rose 1.84 percent year-on-year in the first 11 months, the lowest since 2016, according to the General Statistics Office.

Governor of the State Bank of Vietnam Nguyen Thi Hong said recently Vietnam will be able to keep inflation under the 4 percent threshold this year, but that there would be"very high risks" next year.