Source: The Star
High inflation in Laos has forced many families to cut spending on food, health and education to ensure their income keeps pace with the rising cost of living in the country.
Laos recorded an inflation rate of 25.69 per cent in September, a slight decrease from 25.88 percent in August, according to the Lao Statistics Bureau.
While inflation has eased since early 2023 in the Southeast Asian country, Laos still has one of the highest inflation rates in the region, causing real household incomes to fall for many people, weakening consumption and investment.
“I have two daughters, both of them are studying in primary school. And now I’m having trouble paying for school uniforms and educational equipment. My husband and I need to work harder to ensure that we can continue sending our kids to school with everything they need,” Thidakham, a vendor at a local market in Vientiane province, told Xinhua on Tuesday (Oct 24).
She said the cost of basic items has risen dramatically, adding that her living expenses have gone through the roof. Even something as basic as cooking oil has doubled in price.
“Life is becoming harder every day because rice, food, fuel and everything else are more expensive, but our incomes remain low.”
Depreciation of the Lao currency kip is one of the main factors driving inflation, as one-third of the goods as basis for calculating price rises are imported.
In Round Seven of the World Bank’s Rapid Monitoring Phone Surveys, conducted during June-July 2023, issued on Sept. 12, 87 per cent of households said they are somewhat or significantly affected by inflation. To cope, most reported growing or gathering more food, switching to cheaper food, or reducing the amount they eat.
Sengta, a 39-year-old woman living in the Lao capital Vientiane, told Xinhua on Tuesday that she understood the price of petrol has contributed to the increase in the retail price.
“My uncle is a farmer. He told me that the rising cost of fuel has made it more expensive to transport vegetables to markets. Meanwhile, the depreciation of the Lao currency kip has made it more expensive to import goods, especially fertilizers, which are essential for growing vegetables. This rise in production costs in the agriculture sector has led to a sharp increase in the cost of vegetables.”
Sengta added that she needed to cut down on her expenses because her salary could barely cover her needs these days.
Over the past two months, the Lao government has increased fuel prices several times, which has driven up consumer goods prices at local markets. The rising fuel price has triggered a corresponding increase in several categories, notably food and transport, according to a report released by the Lao Statistics Bureau in August.
At the cabinet’s monthly meeting for October, the Lao government has instructed the relevant authorities to take urgent measures to address the continuing economic and financial difficulties with respect to inflation, unfavourable currency exchange rates, spiraling prices, and foreign debt.
The Lao Ministry of Finance on Oct 2 issued a new instruction to provide a higher supporting allowance for low-wage civil servants and retirees to cover their household spending on basic needs amid the skyrocketing cost of living.
In September, Lao Ministry of Industry and Commerce has collaborated with local companies to sell commonly used consumer items at lower prices, as part of its efforts to alleviate the impact of rising food prices.
The Lao government has taken steps to address the situation. The sale of common household items at discount prices is another effort to ease the burden on local residents.
In another attempt to provide household staples at lower prices, the Lao government is selling stockpiled rice at a slightly lower price than the current market rate.
The price of rice, the staple for every household, has risen sharply over the past year, along with the price of many other food items and consumer goods.
Chanh, a vendor at a local market in Lao capital Vientiane told Xinhua that, “I think it is because we have had terrible floods in recent years, so we have to import more rice from neighbors. As we all know, when the cost of transport rises, everything else goes up in price too.”
“We’re suffering from currency depreciation and high fuel prices,” he said.
The Lao government has introduced a number of policies and measures to stabilise exchange rates and handle inflation. These include boosting domestic production, attracting more tourists to Laos, restricting imports of products the country can produce, and ensuring all foreign currency earned from exports and foreign investments enter the country through the banking system.