HIGHLIGHTS
- Gasoline prices rose to the highest level in about 7 years. This causes many drivers and transport enterprises to fall into a difficult situation.
- With the pressure from freight rates, many consumer goods are inevitable to increase in price.
FULL ARTICLE
Pressure on freight rates
According to the Ministry of Industry and Trade, the increase in domestic gasoline prices is due to the fact that the average price of petroleum products in the world in the 15 days before the operating period on October 26 increased about 10.4% with RON92 gasoline and RON95 gasoline increasing more than 11.2%, oil products increased by 7-8%.
The Inter-Ministry of Industry and Trade and Finance said that from the beginning of 2021 until now, the Price Stabilization Fund has been spent continuously at a rate of 100-2,000 VND/liter/kg, so in this operating period, if there is no increase in the average expenditure of the fund. stable price (BOG) for E5RON92 gasoline and without BOG fund for RON95 gasoline, the price of gasoline products will increase from 1,859 VND/liter to 2,527 VND/liter.
However, the inter-ministerial committee still decided to increase the use of BOG fund for E5RON92 gasoline to 1,100 VND/liter, and the use of BOG fund for RON95 gasoline to 400 VND/liter… Thanks to the use of public funds. As a result of the BOG fund, the domestic gasoline price has had lower volatility than the world gasoline price. However, the increase in gasoline prices has put many businesses and drivers under heavy pressure.
Currently, gasoline prices have increased by about 7,000 VND/liter, equivalent to 30% (from 17,000 VND to 24,000 VND/liter for gasoline prices and 12,600 VND to 18,700 VND/liter for oil prices). This is a record increase that transport businesses have to bear.
A representative of the Vietnam Logistics Association said that if gasoline prices increase, transport businesses will have to consider increasing freight rates. However, the price of gasoline will increase immediately, and if you want to increase the service price, you need to negotiate and re-sign a contract with a partner. If the adjusted freight rates increase, the price of goods will also increase.
In addition to the direct impact of increasing product costs, the increase in gasoline prices also increases the prices of goods in circulation, puts pressure on inflation, reduces the competitiveness of domestically produced goods, and adversely affects economic growth.
Consumer price pressure
With the pressure from freight rates, many consumer goods are inevitable to increase in price, especially in the context of business recovery and strong demand at the end of the year.
At some markets in Hanoi, many small traders said that prices increased sharply compared to the middle of the year. The price of scallions is currently at more than 30,000 VND/kg (an increase of more than 5,000 VND compared to July 2021), pork increases from 15,000 to 20,000 VND/kg; chicken meat increased by 10,000 VND/kg; etc
At Dai Tu market (Hoang Mai, Hanoi), small traders admitted that the prices of many items have been adjusted up. In which, the strongest increase was in pork and vegetables of all kinds. In addition to the increase in gasoline prices, in recent days, the price of live pigs at the barn has increased sharply, the supply of vegetables and fruits has been affected by heavy rain, leading to a skyrocketing price.
According to many small traders, with high transport costs, along with limited supply due to the cold weather at the end of the year, storms, and increased demand towards the end of the year, prices will increase further in the coming year. The increase in gasoline and oil prices will lead to an increase in transportation charges, and an increase in the price of consumer goods will most likely affect CPI and inflation.
The sharp increase in food prices has affected many goods sold. For example, many online shop owners simultaneously announced to increase the shipping fee by 5,000-10,000 VND/order depending on the distance. However, many shops selling cooked food cannot raise prices for reasons of keeping customers. After the epidemic, people’s demand to buy food from outside decreased due to the decrease in income. If the shops “drop water in the rain” increase the price, they will gradually lose the number of customers, affecting the inherent source of income.
Thanh Thảo
FURTHER READING:
Prices of essential goods and raw materials fluctuate sharply
