The surging prices of gasoline, food and services have forced consumers to reduce spending as inflation erodes their purchasing power and incomes remain stagnant.
Hoang Yen of Hanoi University has started taking the bus to school twice a week to reduce her spending on gas.
“The high gas prices mean that I would have to spend VND400,000 ($17.49) a month on using my motorbike, up one-third of my usual expense. Going by bus costs a quarter of that.”
The shift to public transportation comes with some disadvantages, as the 21-year-old student in Hanoi’s Thanh Xuan District has to get up one hour earlier to beat the traffic.
“Not ideal, but it’s either that or cutting down on food,” Yen said.
In Hanoi’s downtown district of Ba Dinh, housewife Le Hoa has reduced her shopping frequency from twice to once a week and only purchases necessities.
“I have learnt to make coffee for my husband so that he does not need to buy takeaways. We try to share a motorbike ride if possible to cut down on expenses.”
A VnExpress survey of 2,400 online readers this month showed that 50 percent have been affected by rising food prices and 40 percent by fuel prices.
The former chairman of the Hanoi Supermarket Association, Vu Vinh Phu, estimated that prices of goods and medicines have risen by 5-30 percent.
The prices of eight of nine main consumer products have risen sharply, with seven, including sugar, cooking gas and instant noodles, seeing double-digit increases.
Gasoline prices have increased by over 25 percent this year and 64 percent year-on-year, with shortages in supply reported both domestically and globally.
Investment firm VinaCapital has forecast that gas prices could increase by another 30 percent in the next few months, which could drive inflation up further.
Food producers say that the rising prices of ingredients and transportation have forced them to hike their prices as well.
Truong Chi Thien, CEO of food company Vinh Thanh Dat, said that the company’s suppliers have hiked prices by 10-20 percent for packages and animal feed, which means it is selling eggs at a loss.
Acecook, the country’s leading instant noodles producer, said it has had to push prices up by 10 percent amid rising transportation and input costs
Middle-class workers have been strongly affected by the price surge.
Pham Duc Toan initially planned to start paying for gym sessions next month, but the recent gasoline price hikes have made him reconsider the decision.
“My discretionary expenses need to be limited now that prices of gasoline and food have jumped. I will try to lose weight at home.”
The software developer in Ba Dinh District used to go out for lunch or have food delivered, but now he brings his own meal every other day.
“Most restaurants near me have hiked up prices, while delivery costs are higher. I will try to cook more often to save money.”
As customers refrain from ordering food, delivery people are seeing their incomes falling.
Bui Van Loc, a food delivery man in Hanoi, now receives only 10 orders a day, half the usual number.
Although both Grab and Gojek have increased fares this month, drivers say that their earnings have dropped because of less customers.
Le Hoang Tuan, who works as a car driver for a ride-hailing company, said that his daily revenue has fallen by nearly 30 percent to VND500,000.
With gas costs and meals taken into account, there is not much left, he said.
“I might spend more time helping my wife’s business at home, as my earnings are no longer attractive.”
While the surging prices threaten to push inflation up, most organizations and experts are optimistic that it will be kept under control.
HSBC has kept its inflation forecast for Vietnam at three percent this month despite concerns about the Russia-Ukraine crisis. The forecast is well under the government’s four percent ceiling.
The World Bank and investment fund Dragon Capital have also expressed similar views.
Nguyen Ba Khang, deputy director of the Information Center of the National Financial Supervisory Commission, said that inflation will rise but “not too much”.
The reduction in value-added tax from 10 percent to 8 percent for the rest of the year and the stabilization in prices of some consumer goods have helped keep inflation under control, he explained.
Such positive views are little comfort to consumers like Dung, the furniture transporter.
“I don’t know about inflation, but I know that eventually I will have to increase my fares.”
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