Inflation giving Lao people serious concerns about the future

The cost of just about everything from food to energy to transport is rising significantly, with the average inflation rate recorded at 19.69 percent over the past 10 months of this year.
In October alone, prices rose by 36.75 percent, up from 34.05 percent recorded in September and 30.01 percent in August, according to the latest report from the Lao Statistics Bureau.
The global economic downturn, conflict between major powers and the depreciation of the kip are among the main factors driving inflation in Laos.

The price of rice surged by 48.1 percent year-on-year.

The spiralling cost of goods and services is one of the greatest concerns of Lao people, with months of constantly rising prices adding to people’s stress about what lies ahead in the future.
The inflation forecast has been sharply revised up to 17 percent for 2022 on higher-than-expected oil prices and the weaker kip, according to a recent report by the Asian Development Bank.
 The ADB stated that 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. 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.
 “Rising inflation and Laos’ high public debt reinforced off-risk sentiment among analysts and market investors,” the ADB stated.
 “Public and publicly guaranteed debt - a large portion of which is external - climbed to 88 percent of GDP in 2021, up from 72 percent in 2020, as the government raised domestic borrowing. The US dollar value of this debt increased because of the weaker kip.”
 According to the Lao Statistics Bureau, the price of fuel in Laos is also trending upwards, which will further impact on agricultural production.
 Farmers are not only suffering as a result of rising production costs, due to the high price of fertiliser, animal feed and crop seeds, but are also feeling the effects of weather extremes.
 In October, the cost of food and non-alcoholic beverages increased by 1.8 percent month-on-month and 38.8 percent year-on-year.
 The price rise in this category was driven by the higher price of rice, which surged by 48.1 percent year-on-year.
In addition, the cost of pork rose by 44.7 percent year-on-year, the price of beef rose by 21.3 percent, poultry by 28.8 percent, fish and seafood by 1.3 percent, eggs, cheese and milk by 43.5 percent, cooking oil by 95 percent, and vegetables by 43 percent.
Meanwhile, costs in the communications and transport category rose by 58.1 percent year-on-year. Specifically, the price of vehicles, fuel and transport equipment went up by 61.6 percent, 95 percent and 62.4 percent year-on-year respectively.

By Somsack Pongkhao
 (Latest Update November 23, 2022)