Economic pressure eases as inflation drops
Economic pressure eases as inflation drops
The inflation rate in Laos saw a minor drop in January, easing pressure on the government to keep the macro economy stable.
According to a report from the Lao National Statistics Bureau earlier this week, the inflation rate in January was 5.99 percent, lower than the 6.65 percent in December and 6.94 percent in November, due to lower pricing on food and non alcoholic drinks.
The Consumer Price Index (CPI) in the food and non alcoholic drinks category, one of the 12 goods and services categories which the bureau monitors monthly, has seen a continuous drop over the past few months. The CPI for this category was 11.49 percent in January, dropping from 12.40 percent in December and 14.25 percent in November.
The report shows that the price of rice saw a minor drop over the past few months due to a large supply in the market. Rice is one of the major consumable goods in Laos and its price plays an influential role in the inflation rate in the country.
Dropping the price of vegetables due to an oversupply of goods was also one of the main causes for the lower CPI in the food and non alcoholic drinks category.
The price of poultry, fish, seafood, pork and beef saw a minor rise in January but these items are not considered major consumables therefore their rising prices have little effect on the CPI.
The CPI of other goods and services categories, such as alcoholic drinks and cigarettes, water supply, electricity and cooking gas, health care services, transportation and education, entertainment, hotel and restaurant services remained stable in January, the report mentions.
Economists said that the dropping inflation rate in Laos was partially due to the large seasonal supply of agricultural products, adding that the abundant supply of rice made the price go down. Rice pricing in neighbouring countries also dropped which added to the downward pressure on pricing here as Laos has no policy to ban imports of foreign rice.
They said that the dropping inflation rate would reduce the pressure the government faces in managing the macro economy, adding that the government had a policy to keep inflation lower than eight percent otherwise it will face difficulty to stabilise the macro economy.
The government has been trying very hard to curb inflation, in particular with the price of food, which saw a rapid rise over the past several months. The government has set up reference prices for beef and pork, aiming to force the vendors to follow.
Economists said that the government should not feel it can relax after inflation has dropped as it is possible that it will increase by the end of this year, citing the failure of the government to collect revenue will be one of the main causes of an inflation hike.
There is a large amount of money in circulation but the government has been unable to fully collect therefore it is possible that the country can face high inflation, they said.
vientiane times
