Bureau Outlines Three Main Causes Of Inflation

Source: Vientiane Times

The Lao Statistics Bureau has highlighted three main underlying causes of inflation, amid rising concerns over the ongoing health crisis and food security.

The first cause is linked to the spread of the Covid-19 virus, which has led authorities in several provinces to order lockdowns in a bid to flatten the infection curve.

However, the lockdown is disrupting economic activities and the transport of goods between provinces and the capital, notably food products such as pork, beef, vegetables and fish.

The second cause concerns fluctuating currency exchange rates, with the kip continuing to depreciate against foreign currencies, especially the Thai baht and US dollar.

Strong demand for these currencies means that businesses often rely on the parallel market to buy the foreign currencies they need to import goods.

The third factor relates to the increase in the price of oil, which has affected productivity and the transport of goods to markets.

Just recently, the Ministry of Industry and Commerce informed the public of the latest increases in the price of all types of fuel.

The price of premium grade fuel rose by 410 kip a litre, while regular fuel went up by 380 kip, and diesel by 440 kip a litre.

Many people are not only encountering hardship following job losses but are struggling to earn a living because of the rising cost of everyday essentials.

Although the year-on-year inflation rate declined from 4.7 percent in July to 3.81 percent in August, this rate is relatively high.

In August, the cost of food and non-alcoholic beverages surged by 2.78 percent year-on-year, and 0.56 percent month-on-month.

For instance, the price of beef and pork rose by 9.58 percent and 6.72 percent year-on-year respectively. The rates of fish and seafood increased by 5.86 percent year-on-year, poultry (6.85 percent), cheese and eggs (13.5 percent) and cooking oil (17.21 percent).

Prices in the clothing and footwear category went up by 3.64 percent year-on-year and 0.25 percent month-on-month. Men’s clothing and women’s clothing increased by 4.65 percent and 3.2 percent year-on-year respectively.

The price of vehicles and petrol went up by 6.25 percent and 22.11 percent year-on-year respectively.

The cost of housing, electricity, water and gas increased by 3.61 percent year-on-year and 0.74 percent month-on-month. For instance, the price of rental houses and apartments and gas went up by 1.89 percent and 0.72 percent month-on-month respectively.

The cost of household goods rose by 0.46 percent month-on-month, and 4.1 percent year-on-year.

Prices of medical care items climbed by 1.13 percent month-on-month and 4.09 percent year-on-year due to the rising cost of medicines and hospital services.

Meanwhile, prices in the restaurant and hotel category went up by 1.03 percent month-on-month and 5.59 percent year-on-year.