Commodity prices unlikely to follow cuts in fuel prices

by NDO14 July 2022 Last updated at 13:00 PM

People buy petrol at a filling station in Dong Da District, Hanoi.
People buy petrol at a filling station in Dong Da District, Hanoi. - The price of fuel in Vietnam has been cut by about 2,000-3,000 VND per litre, the sharpest fall since the start of the year after peaking at nearly 33,000 VND, but prices of other goods are unlikely to follow suit.

A survey by Nhan Dan reporters shows that prices of the majority of goods on the market remained unchanged, with the exceptions being some seasonal vegetables and fruits going down slightly due to abundant supplies.

Lower fuel prices have helped people and enterprises, especially transport companies ease the burden of rising operating costs and facilitate the post-pandemic recovery. Nguyen Thu Huong, owner of a food shop in Ha Dong District, Hanoi, said she expects the price of other goods to go down correspondingly to encourage consumers to spend more.

Similarly, Ta Khac Ngoc, who transports food for wholesale markets in Hanoi, said fuel price cuts will help people’s lives to be less difficult, especially with goods directly related to petrol and oil.

According to Vice Chairman of the Hai Phong Automobile Transport Association, Khuc Huu Thanh Hai said lower fuel prices have helped reduce pressure on transport companies quite a lot as they are now in their most difficult time.

Director Do Van Bang of Minh Thanh Phat Company, which runs Sao Viet Bus, said transport companies are not considering fare cuts at the moment because, with fuel price adjustments made every ten days, it is not known if fuel prices will go up or down next time. If petrol prices are reduced for several consecutive rounds and return to the previous level, his company will lower the fares, said Bang.

General Director of taxi operator Vinasun Ta Long Hy said there is always a delay between fuel prices and taxi fares. For example, fuel prices have gone up in the past three months but it was not until recently that taxi companies submitted their proposals to hike fares to the regulators. For now, fuel prices remain unpredictable so lowering fares are currently not on the table and taxi operators need to watch for more signals from the market.

Director of the Nam Linh Garment Company Le Tuan Linh shared that the company is very happy to see fuel prices fall because they help bring down the price of input materials and transport costs, which will eventually benefit consumers with lower prices of final products.

Nevertheless, many companies are still worried as there are no grounds that domestic oil prices will stabilise or not rise sharply next time, which makes it difficult for enterprises to outline their business strategies and decide on the prices of their products.

The price of consumer goods are expected to go down following fuel price cuts. (Photo: Thu Thao)

According to Associate Professor Dinh Trong Thinh at the Academy of Finance, the price of fuel has been cut sharply but remains high while the price of input materials in many manufacturing sectors has increased, and it will take time for them to go down. Therefore, with this round of fuel price cuts, corresponding reductions in the price of other goods are not anticipated as they also depend on supply and demand.

To continue removing difficulties, transport enterprises propose that the Government should consider reducing special consumption and import taxes on fuels and extending the effective period for environmental protection tax cuts. They also called for measures to ensure stable interest rates on bank loans as rising rates are making it difficult for enterprises to access funds.

According to the Ministry of Industry and Trade, it will work with the Ministry of Finance and other ministries to propose reducing several other taxes on fuels such as import tax, special consumption tax and value-added tax to bring down domestic fuel prices, curb inflation and support the implementation of the socio-economic recovery programme.


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