Inflation rate trends higher in Laos
Inflation rate trends higher in Laos
The inflation rate is trending higher in Laos despite the government's measures to manage the prices of products in markets.
A senior economist from the National Economic Research Institute Dr Leeber Leebuapao told Vientiane Times on Wednesday that the inflation was mainly driven by rising food prices.
He explained that the current inflation is not related to external factors as fuel prices are falling on the world market but is associated with supply and demand of products consumed locally, notably in the food category.
“From next month until April, the inflation rate tends to go up as demand for food will rise,” Dr Leeber said.
Despite the falling price of oil, the cost of transportation in Laos remained high. However inflation was lower than the rate of economic growth which is expected to grow to 7.5 percent in 2014-15.
The country's economic slowdown and the revenue shortfall is forcing the government to rein in expenditure while the halting of a 760,000 kip monthly living allowance for state employees has affected purchasing power in the country.
Vientiane residents have complained about rising inflation and the increasing cost of living in Laos which has affected their livelihoods and their family development.
Many people are complaining that their income did not rise but their expenses are going up.
Laos has one of the highest inflation rates of all Asean countries due to the rising value of imports.
According to the government report, in the past six months of the 2013-14 fiscal year the value of exports reached US$1.1 billion, an increase of 25 percent while the value of imports exceeded US$1.9 billion, an increase of 70 percent.
The main items imported were vehicles and spare parts, industrial products, fuel and gas, construction equipment and food products.
Generally the inflation in Laos has fluctuated but has been manageable, indicating that the inflation rate dropped from 30.3 percent in 1985 to 19.6 percent in 1990 and 11.12 percent in 1995.
But in 2000, the inflation rate rose to 23.1 percent before declining to 9.6 percent in 2005 and 4.7 percent in 2010 respectively.
The average inflation rate recorded in 2014 reached 4.13 percent, declining from 6.37 percent reported in 2013, according to a report from the Bank of Lao PDR.
In January last year, the inflation rate hit 5.99 percent before continuing to decline every month with its lowest rate of 2.40 percent recorded in December.
Critics say the government needs to impose concrete measures to curb inflation, notably the regulation of food prices which are considered the main driver of inflation.
It is seen as essential to boost domestic production for in-country consumption and for export, as this would earn foreign currency while reducing imports.
