Lao inflation falls but price hikes persist
Lao inflation falls but price hikes persist
The average inflation rate in Laos over the first six months of this fiscal year stayed at 4.85 percent, while economists urged the government to introduce concrete measures to rein in inflation.
According to a report from the Lao National Statistics Bureau, this figure was lower than the average inflation rate over the same six months last fiscal year, when it was 6.74 percent.
But despite the lower inflation rate this year, the figure has risen gradually from 3.51 percent in October 2012 to 5.70 percent in January 2013 and 5.80 percent in March. If this trend continues, Laos will find it difficult to keep inflation low.
The bureau also reported that the exchange rate of the kip versus foreign currencies over the first six months of this fiscal year remained within the targeted 0.5 percent range. The kip rose in value by 1.13 percent against the US dollar over the first six months while undergoing 2.45 percent depreciation against the Thai baht over the same period.
Laos has foreign reserves of about US$737 million, which is sufficient to purchase imports for at least five months.
The report also states that the country's supply of money over the first half of this fiscal year increased 21 percent compared to the same period last year. The increase in money supply is due to the fact that banks have issued a large number of loans to businesses to boost growth, and to government poverty reduction projects.
An economist at the National University of Laos, Associate Professor Phouphet Kyophilavong, said the inflation rate for this fiscal year was acceptable. But he urged the government to put in place concrete measures to keep food prices low as the main cause of inflation is the rising price of food items.
The price of beef and vegetables has surged in the past six months, with trade officials saying that short supply has caused the price increase. They also say the uncontrolled export of cattle has contributed to the food price hike.
Increases in the price of electricity, water and cooking oil have also driven up inflation in recent months.
Other economists say the government also needs concrete measures to boost domestic production and consumption as long term solutions to addressing inflation, pointing out that Laos is heavily dependent on imports.
When a country's exports are mostly natural resource-based, such as mining products, as in the case in Laos, these do not constitute a sound economic base because they will one day be depleted.
vientiane times
