A Rapid Assessment of The Impacts of Price hikes on People in Selected Urban Areas

Publication date

01 May 2011

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Rapid assessments in three residential areas of Hanoi, Haiphong and Ho Chi Minh city in May, 2011 were implemented to discover response measures and the influence of price increases on urban groups, including the poor (people who receive social protection), migrants, local self-employed labourers, pensioners, civil servants and medium-income workers. The average retail price of most essential commodities and services in surveyed sites increased in the first four months of 2011, especially after the beginning of Lunar New Year (February). Commodities with significant price increases included foods and foodstuffs; electricity, petrol, gas, and rental apartments. However, the price of several commodities in the first two weeks of May, 2011 leveled off, and in some cases even slightly decreased (for some types of meat and vegetables) compared to those in April, 2011. The minimum wage was adjusted upwards in May but the price of most essential foods and foodstuffs did not increase, which could be explained by sharp price increases in previous months. High prices led to demand contraction, so shops tended to remain and decrease their price. In general, social groups surveyed expressed the most concern about price increases of food and foodstuffs (meat, fish, rice, and other foodstuffs) and fuels (electricity, petrol, gas). Poor, low and fixed income groups (poor households, workers, and pensioners) paid more attention to price increases of food and foodstuffs for minimum needs (meat, fish, rice, vegetable, other foods). The poor and old people covered by social protection policies were also concerned about the expense of medicine and health services. Medium and moderately good income groups or rising income group (in relation with price increases) -self-employed and civil servants- cared especially about the price increases of gasoline, electricity and gas. Rising accommodation costs are migrant-specific concern. Common coping strategies applied by social groups to cope with price increases include decreasing electricity use, decreasing personal consumption, rationing, buying cheaper foods, decreasing gas consumption, and decreasing monthly savings among others. Of these, “decreasing electricity use” and “decreasing personal expenditure” were the two top priorities applied. Many households also chose to cook at home and eat out less to reduce their expenses. Price increases from early 2011 have decreased purchasing power, quality of life and exacerbated inherent difficulties of poor, low and fixed income groups. Among social groups surveyed in urban areas, the poor, people receiving social security and migrant workers suffered the most. For the poor, price increases had a negative influence on their nutrition and health and their access to basic services (education, health care). Migrants reported that price hikes made their lives more difficult due to higher costs. Price increases were also reported to have made labour relations tenser and negatively impact on the occupation stability of migrant workers. Price increases also exacerbated the lack of social capital situation of both local poor people and migrants. 6 Extremely effects such as “stopping children from schooling”, “selling properties” or “increasing borrowings for daily expenditure,” did not appear in all surveyed groups. Credit activities for the poor in localities have not been badly affected. The affect (of price increases) on gender relations, could only be seen through a re-allocation of work in the family (women had to take bigger responsibility for family meals, some women in poor households had to find extra work to supplement their incomes). Changes in job structures due to price increases are not yet apparent in the same way as are the effects of the Global Financial Crisis in 2009. The main concern of interviewees was how to get a job with a higher income so as to mitigate against the rise in prices.