The government is working to boost domestic output and export.

Inflation remains high despite govt’s attempts to cap price rises

The inflation rate in Laos rose more slowly in September at 25.69 percent, down from 25.88 percent recorded in August, according to a report from the Lao Statistics Bureau.
However, the rate remains high, driven by three main factors, namely weak domestic output and heavy reliance on imports, continuing depreciation of the kip, and the rising price of imported goods.
In September, the value of the kip fell by 5.8 percent and 4 percent against the US dollar and Thai baht respectively, compared to the figures for August, according to the Lao Statistics Bureau.
In addition, the price of imported goods, especially fuel, rose by an average of 6 percent in September compared to the figure recorded in August.
Further exacerbating the country’s economic woes, from April to August this year the trade deficit rose to a record US$444 million, with a deficit of US$17 million recorded in April, US$47 million in May, US$126 million in June, US$166 million in July, and US$88 million in August, according to the Lao Trade Portal.      
The trade deficit ramped up pressure on exchange rates as more currency was spent on imported goods.
At a recent cabinet meeting, the government ordered the relevant agencies to do more to curb the high rate of inflation, stabilise currency exchange rates, and deal with the soaring levels of debt owed to other countries.
Other sectors of government were advised to intervene and place caps on the market price of household staples such as rice, meat, fish and eggs.
In addition, the Ministry of Finance was instructed to modernise the system of tax collection at border crossings, to boost the government’s revenue and minimise the amount of money lost through weak law enforcement and lack of oversight.
Minister of Industry and Commerce Mr Malaythong Kommasith outlined the measures needed to deal with economic problems when he met with officials from the provinces of Borikhamxay, Khammuan and Savannakhet recently.
He said importers and exporters must register their operations and carry out all financial transactions through the banking system. He also stressed the need to identify which crops have strong market potential and the parts of the country where these crops can be grown for export.
Authorities must also make a concerted effort to tackle illegal trade as the government attempts to restrict the import of items that can be grown or manufactured in Laos.
In September, the highest price rise was recorded in the hotel and restaurant category, which stood at 34.4 percent year on year.
This was followed by the clothing and footwear category (29.7 percent), the food and non-alcoholic beverage category (29.4 percent), the household goods category (24.3 percent), the alcohol and tobacco category (23.4 percent), medical care and medicine (21.1 percent). and the communication and transport category (20.7 percent).

By Somsack Pongkhao
 (Latest Update October 10, 2023)