Inflation hits 22-year high of 34 percent in September

The year-on-year inflation rate increased from 30.01 percent recorded in August to 34 percent in September, according to the latest report from the Lao Statistics Bureau.
The 22-year high price rise is driven by the surge in the price of food, medicines, fuel and other consumer goods.
The global economic downturn, conflict between major powers, and the Covid-19 outbreak have disrupted economic activities and directly impacted Laos.

The price of rice surged by 45.3 percent year-on-year in September.

Inflation has surged significantly since last year, and the country now has one of the highest inflation rates in Southeast Asia.
The Lao Statistics Bureau also attributed the continuing surge in the consumer price index to low productivity and the fact that Laos is over-reliant on imports.
The weak kip and growing demand for the foreign currencies needed to import goods and repay debts is another driver of inflation.
The kip fell in value by 37.4 percent against the US dollar and by 32.9 percent against the Thai baht in the official currency market from January to August, according to the Asian Development Bank.
The ADB said the gap between the official and parallel foreign exchange markets was 38.6 percent by mid-June, but narrowed to an average of 15.9 percent in August.
The kip continues to depreciate despite the government’s attempts to regulate currency exchange rates.
In addition, floods have destroyed crops and other property, sparking demand for more food at local markets.
In September, the cost of food and non-alcoholic beverages increased by 4.9 percent month-on-month and 35.5 percent year-on-year. The price rise in this category was driven by the higher price of rice, which surged by 45.3 percent year-on-year. The cost of pork rose by 35.1 percent year-on-year, the cost of poultry rose by 32.1 percent, fish and seafood surged by 28.9 percent, and eggs, cheese and milk went up by 35.9 percent. Meanwhile, costs in the communications and transport category rose by 2.9 percent month-on-month and 55.9 percent year-on-year. Specifically, the price of vehicle, fuel and transport equipment went up by 56 percent, 100.6 percent and 64 percent year-on-year respectively. The cost of medical care and medicines increased by 4.9 percent month-on-month and 44.5 percent year-on-year. The cost of medicines and hospital services jumped by 50 percent and 13.7 percent.
In addition, prices in the house goods category surged by 3.6 percent month-on-month and 27.5 percent year on year. The price of interior decor, and mattresses and bed sheets, went up by 21.6 percent and 20.7 percent year-on-year respectively. 
Prices in the education category surged by 10.6 percent year-on-year, the hotel and restaurant category (24.8 percent), goods and services category (25.9 percent), clothing and footwear category (22.2 percent), and housing, water supply, electricity and gas (22.9 percent).

By Somsack Pongkhao
 (Latest Update October 10, 2022)