Vietnam’s fuel prices have risen by more than 20% in the past three months, exacerbating inflation and corporate cost pressures

(Central News Agency reporter Zeng Tingxuan, special report from Hanoi on the 3rd) Vietnam’s fuel prices have increased by more than 20% in the past three months, pushing up production, transportation and commodity costs, exacerbating inflationary pressure. The average consumer price in the first eight months of this year also increased by more than 4% compared with the same period last year. Taiwanese businessmen told China Central News Agency that labor costs alone have increased by more than 10%, and transportation fees and quotation frequency have also increased significantly.

Vietnam News Agency reported on the 1st that in the past month, gasoline prices in Vietnam have increased five times in a row, and diesel prices have also increased three times in a row, increasing the costs of various industries from agriculture, animal husbandry, fishery, factories to transportation companies.

Vietnamese media pointed out that at the end of September, the price of 92 unleaded gasoline rose to 26,397 VND per liter (approximately NT$32.33), the price of 95 unleaded gasoline rose to 27,087 VND per liter, and the price of diesel increased to 30,497 VND per liter.

According to GlobalPetrolPrices, the price of 92 unleaded gasoline dropped to its lowest point in recent years at the end of June, about VND20,126 per liter, due to the strong government intervention at the time, and has since risen. At the end of July, it rose to 22,388 VND per liter, and now it has risen to 26,397 VND. The cumulative increase of gasoline in the past three months has exceeded 20%. After the latest round of price adjustments on October 1, diesel prices fell for the first time in recent times and are now VND 29,710 per liter.

The Hanoi Small and Medium Enterprises Association told VNA that rising gasoline prices have put pressure on manufacturing, trade, and import and export enterprises.

For exporters, rising gasoline prices have pushed up transportation costs, including container freight, domestic shipping charges, insurance premiums and other related expenses, the association said. Because companies typically agree on a price before the goods are delivered, rising costs during the contract squeeze profit margins.

Zhu Guiliang, general manager of Hongtai International Logistics Hanoi Branch, said in a telephone interview with Central News Agency on the 3rd that the fuel subsidy for office workers commuting alone has been increased by 12% to 15%. In addition to labor costs, electricity bills were also increased once last year and once this year.

He said that due to the sharp increase in international fuel prices, emergency fuel surcharges need to be used, which are additional fees that transport carriers temporarily increase in response to a sudden sharp rise in international fuel prices.

Zhu Guiliang pointed out, "In the past, freight rates were negotiated with some airline operators on a quarterly or monthly basis, but now they are adjusted on a weekly basis, which makes our work efficiency much lower. We have to constantly respond quickly and re-bill to customers."

For customers, "the rise in oil prices will cause sea freight costs to rise by more than 20% and air freight costs to almost exceed 30%, but in the end it is the end customers who have to absorb them."

As a result, prices continue to rise. The National Bureau of Statistics said that the consumer price index increased by 0.47% quarterly in August, mainly due to the impact of rising international oil prices.

Vietnamese media wrote that average consumer prices in the first eight months of this year increased by 4.45% compared with the same period last year. The prices of housing, electricity, water, fuel and building materials increased by 6.71%, the prices of transportation increased by 5.38%, and the prices of food and catering services increased by 4.76%.

Vietnam Military Bank Securities (MBS) said that due to rising global oil prices, rising construction costs and domestic economic factors, Vietnam is likely to continue to face inflationary pressures in the last four months of this year. MBS predicts that average consumer price inflation will be 4% to 4.5% this year, while GDP growth in the third quarter will be 8.7% to 9%.

MBS said that as a net energy importer, Vietnam is vulnerable to global oil prices, pushing up domestic fuel prices. And due to the demand for infrastructure and residential development, the price of construction materials is also likely to rise. For example, the price of steel is expected to increase by 7% compared with the same period last year.

Shi Guofeng, who has been running the specialty coffee brand KOK in Vietnam for many years, told CNA that transportation costs and packaging raw materials increased significantly last year, and no price increase notification has been received yet. "However, due to the recent fluctuations in oil prices, any impact is expected to be by the end of the year."

The government announced on the 1st that the tax reduction policy for gasoline and diesel would be extended for another three months. Tú Anh, director of the Macroeconomic Research Program of the Smart Green Transformation Center at Vietnam University, told the Vietnam News Agency that although the Vietnamese government used stabilization funds to limit fuel increases in the past few months, as global oil prices continue to rise, the space for such intervention will become increasingly smaller.

He said that the recent increase in gasoline prices has significantly aggravated inflationary pressures, and without appropriate policies, the inflation rate may exceed the government's 4.5% target by the end of the year.

In view of the limited policy space, he suggested that the government avoid adopting large-scale gasoline price subsidies and adopt targeted measures, with priority given to diesel used in large-scale logistics transportation and machinery production.