The downtrend in consumption may last until the end of 2023

Sharing at the periodic press conference in the second quarter of 2023 on the afternoon of July 18, Ms Nguyen Thi Kim Ngoc, Deputy Director of the Ho Chi Minh City Department of Industry and Trade said, in the first 6 months of 2023, businesses face many difficulties and challenges. This is due to rising raw material prices, tight monetary policy to combat inflation and the risk of economic recession in many countries. Export markets are shrinking.

However, businesses have made great efforts to implement many solutions to stabilize the production and business situation. Many facilities and businesses have actively secured orders for production in the first months of 2023. Up to now, production and business activities have continued to recover.

Total retail sales of consumption for goods and services in the first 6 months of 2023 in Ho Chi Minh City is estimated at over VND 102,300 billion. An increase of 2.9% over the previous month and 11.2% over the same period in 2022.

In the first 6 months of 2023, businesses, trade centres, supermarkets and business establishments actively prepare an abundant, rich, and diverse source of goods to serve the needs of the people.

“The world economy is strongly affected by geopolitical conflicts, high global inflation leads to a downward trend in consumption, hurt the export of goods of Vietnam in general and the city in particular. This led to many businesses having no orders and orders from the world market gradually decreasing. Import-export turnover of many commodities decreased compared to the same period in 2022 and this situation may last until the end of 2023," the representative of Ho Chi Minh City Department of Industry and Trade said.

Before the information about increasing the base salary from July 1, many consumers were worried that the prices of food, foodstuff and goods at the markets would increase accordingly. Deputy Director of Ho Chi Minh City Department of Industry and Trade Nguyen Nguyen Phuong affirmed that Ho Chi Minh City is implementing many stabilization programs, deep discounts and promotions to limit price increases.

According to Mr Nguyen Nguyen Phuong, according to the economic law, increasing wages cannot increase the prices of goods. However, some small traders still increase the price of goods, because the prices of goods in the market depend on the amount of goods prepared by traders during the day and on customers shopping.

Specifically, if during the day the goods are still in stock, at the end of the day, traders will sell at a discount, then the goods will decrease in price. However, if the number of customers increases and if this is a new customer segment, the trader may push the price up to make a profit.

"This can be considered the phenomenon of 'improvising', so in order to keep commodity prices from increasing in line with wages, right from the first months of 2023, Ho Chi Minh City has implemented a series of price stabilization activities to stimulate consumer demand, promote retail activities, and support economic growth recovery. This contributes to preventing the "wave" of price increases when wages increase and alleviates some of the people's worries," said Ms Phuong.

Ho Chi Minh City currently deploys a focused promotion program in 2023 which is held in three months. This lasted until the end of September 15 with the participation of 3,000 businesses and more than 7,000 promotional activities. Retailers have launched a series of discount programs for essential consumer goods, especially food and foodstuff products. This is to support and share part of the spending burden with consumers.

In addition, from July 1 to December 31, the Government's policy of reducing value-added tax (VAT) by 2%, from 10% to 8% of the Government, is officially applied to groups of goods and services. This adjustment contributes to reducing production costs for businesses, reducing selling prices and reducing people's costs in daily consumption of goods and services.