Food prices drive inflation rate up
Food prices drive inflation rate up
The inflation rate in Laos rose to 6.94 percent in November as the government continues to struggle to control the rising price of food in the country.
Despite the government's efforts to control the price of food over the past months, food and non-alcoholic drinks saw a 14 percent increase according to the Consumer Price Index last month compared to the same period last year, becoming the main driving force of inflation growth in November.
The government introduced a number of measures to control the price of foods including setting up reference prices of goods for vendors to follow during major trade fairs in Laos.
Vendors have also been told to advertise the price of their goods, making it easier for trade officials to monitor the amounts being charged for certain products.
Increasing consumption demand due to population growth and the inflow of foreign migrants is one of the main causes of rising inflation which saw the price of food increase. Lower agricultural output due to natural disasters is also one of the causes of the food price hike.
According to a report from the Ministry of Planning and Investment, despite the government policy to modernise the agricultural sector, which employs more than 70 percent of the Lao population, the sector saw only 3.3 percent growth in the 2012/2013 fiscal year.
However it is not only Laos that is facing rising food prices but also many other countries due to the shortage of supply. Countries in the region including Laos have experienced natural disasters, which have led to a drop in agricultural production.
The second driving force of the November inflation rate was the increasing price of restaurant and hotel services. The CPI of the service category saw an 8.81 percent increase compared to the same period last year.
Meanwhile the rising price of clothes and footwear also drove the November inflation as CPI for the category saw 7.07 percent growth compared to the same period last year.
The CPI of alcoholic drinks and cigarettes saw a 6.55 percent increase compared to t he same period last year while the CPI of water supply, cooking gas and electricity saw a 3.42 percent increase.
The CPI of goods and services which saw slow growth in November included health care services, educational materials and services as well as post and telecommunications. Meanwhile the CPI of transport services saw a 0.24 percent contraction.
Despite the rising inflation rate, the government announced th at it would try its best to keep CPI below the economic growth level so as it can keep the macro-economy stabilised.
Economists said that one major concern was that the inflation rate in Laos would see a big jump this fiscal year as the government was unable to collect revenue in line with the targets set. The government was only able to collect 95 percent of the revenue target set for last fiscal year.
vientiane times
