Falling oil prices contribute to lower inflation
Falling oil prices contribute to lower inflation
The continuing decline in oil prices has significantly contributed to a lower inflation rate in Laos, the lowest in six years.
The inflation rate in Laos in 2015 averaged 1.28 percent, down from the average rate of 4.62 percent recorded the previous year.
Over the past six years, the inflation rate had ranged from 4.13 to 7.58 percent, except 2009's figure which was recorded at 0.03 percent, according to the Bank of the Lao PDR.
A senior economist from the National Economic Research Institute, Dr Leeber Leebouapao told Vientiane Times yesterday “The falling inflation rate was mainly attributed to the drop in fuel prices as it contributes to lowering the cost of production.”
Another significant factor was sufficient supply of food products and other goods to meet the demand in society, which used to be one factor driving inflation, Dr Leeber said.
He observed that since the establishment of the Asean Economic Community goods could cross the border more easily with many Lao people importing a lot more goods from Thailand particularly food items.
Dr Leeber said the Bank of the Lao PDR recently lowered the interest rate which should further contribute to reducing the cost of products and boosting productivity in the country.
Last year, the Ministry of Industry and Commerce approved 12 changes in fuel prices, with a majority being price reductions which contributed to lower production costs in Laos.
In January this year the ministry adjusted the fuel price down twice.
The latest fuel prices in Vientiane are 7,970 kip a litre for premium petrol, 6,970 kip a litre for regular grade petrol, and 5,600 kip for diesel.
According to the Bank of the Lao PDR, last year in January the Consumer Price Index stood at 122.7 with the inflation rate at 2.04 percent.
This trended downwards to 1.44 percent in February, 1.19 percent in March, 0.95 percent in April, 1.19 percent in May, 1.37 percent in June, 1.17 percent in July, 1.29 percent in August, 1.23 percent in September, 1.32 percent in October, 1.27 percent in November and 0.90 percent in December.
In general, the inflation rate in Laos was lower than the rate of economic growth which was recorded at 7.5 percent this year.
Economists forecast that the economy will continue to grow at 7.5 percent this year which will be driven by several large-scale projects such as the Hongsa power plant and hydropower projects.
In addition, a number of projects which have been stalled in past years have recommenced construction further driving economic growth.
