May inflation rate hits highest level in 18 years

The inflation rate in Laos climbed to its highest level in 18 years last month, with prices rising by 12.8 percent from a year ago, according to the latest report from the Lao Statistics Bureau.
The fuel crisis, with petrol stations across the country running dry, and the continuing depreciation of the kip are among the main factors driving inflation.

The surge in the consumer price index survey, which measures the prices of various goods, was the largest after the year-on-year inflation rate hit 12.9 percent in February 2004.
Laos currently has one of the highest inflation rates in Southeast Asia and many low-income earners are struggling to afford basic groceries and other necessities.
 The price of consumer goods jumped faster than expected over the past eight months, with the high cost of fuel, food and other essentials placing a great burden on ordinary people.
 Exacerbating the situation, the Russia-Ukraine conflict has resulted in a volatile global fuel market amid fears of a global economic shock and food crisis.
 In May, Lao authorities hiked the price of fuel two times, creating added expense for the transport sector and driving up the price of consumer goods at local markets. In May, the price of fuel surged by 92.6 percent year-on-year, affecting both the cost of production and the cost of living.
 The price of gas, gold and steel jumped by 39.7 percent, 48.5 percent and 68 percent year-on-year respectively.
 In addition, the cost of cheese, milk and eggs went up by 27.79 percent year-on-year. Other products that significantly drove up inflation included bread and flour (up by 16.7 percent year-on-year) and cement.
 The kip has plunged to its lowest value in decades due to a supply-demand mismatch. Most businesses base the price of their products on foreign currencies, notably the Thai baht and US dollar, so that they don’t lose money.
 BCEL exchange rates on June 8, 2017, saw US$1 buy 14,333 kip and sell for 14,364 kip, and one baht buy 495.26 kip and sell for 498.99 kip.
In January this year, the year-on-year inflation rate was recorded at 6.25 percent, rising to 7.31 percent in February, 8.54 percent in March, and 9.86 percent in April.
According to the Lao Statistics Bureau, costs in the communications and transport category rose by 6.2 percent month-on-month and 34.5 percent year-on-year in May. The price rise in this category was driven by the higher price of fuel, cars and spare parts. The cost of vehicles rose by 34.5 percent year-on-year.
In the meantime, prices in the goods and service category surged by 3.9 percent month-on-month and 20.6 percent year-on-year. The cost of medical care and medicines increased by 1.8 percent month-on-month and 13 percent year-on-year.
The cost of food and non-alcoholic beverages increased by 3.2 percent month-on-month and 8.2 percent year-on-year.
Meanwhile, the cost of clothing and footwear rose by 2.2 percent month-on-month and 11.7 percent year-on-year.

By Phetphoxay Sengpaseuth
 (Latest Update June 9, 2022)