Electricity costs account for a significant portion of production expenses for these businesses, so an increase in electricity prices could raise their cost of goods sold.
Vietnam Electricity Group (EVN) has just announced an adjustment to the average retail electricity price to 2,204.06 VND/kWh starting from May 10, 2025, which represents a 4.8% increase compared to the most recent hike on October 11, 2024.
Previously, electricity prices increased roughly every two years by about 6–8%, but in recent years, the frequency of price hikes has accelerated due to the rapid rise in electricity production costs. The cost of electricity production is influenced by various input factors such as electricity output, coal, oil, gas prices, and exchange rates. Although the prices of oil, gas, and coal have been trending downward, the high exchange rate may have driven this round of increases, partly to offset EVN’s financial difficulties in recent years.
Electricity accounts for about 3% of the components used to calculate the Consumer Price Index (CPI), so a 1% increase in electricity prices leads to a 0.03% rise in CPI. With the electricity price increase of 4.8% starting May 10, 2025, the CPI for the year is estimated to rise by about 0.07–0.10 percentage points. Overall, the electricity price hike has a minimal impact on the 2025 CPI, and the inflation forecast for the year remains within the government’s target of under 4.5%.
Power generation companies will benefit the most, primarily because of EVN’s improved payment capacity, which supports cash flow and business performance. Additionally, the electrical construction sector could benefit as EVN’s better financial condition may allow for improved implementation of power source and grid projects. Yuanta favors stocks such as GEG and REE.
Conversely, some electricity-intensive manufacturing sectors—such as cement, steel, chemicals, and paper—will be negatively affected. Since electricity costs account for a large proportion of these businesses’ production costs, an increase in electricity prices could raise their cost of goods sold.