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Inflation Continues To Rise Amid Covid-19 Crisis

Source: Vientiane Times

The year-on-year inflation rate continued to rise in Laos in March amid economic distress triggered by the Covid-19 pandemic.

According to the Lao Statistics Bureau, the Consumer Price Index (CPI) stood at 114.42 points in March, indicating an inflation rate of 2.48 percent year-on-year. This was up from the 1.91 percent recorded in February.

Economists are concerned that the interruption of economic activities by a second wave of Coronavirus infections and lockdown measures imposed in Vientiane and other provinces could further affect prices of products in local markets.

Rising food prices and the weakening value of the kip against the Thai baht and US dollar are among the main drivers of inflation in Laos, despite the government’s attempts to manage prices of products in domestic markets.

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The prices of rice, meat and other fresh food items have continued to rise, while the price of fuel has gone up due to taxes increasing in line with the cost of oil imports.

Vientiane mainly depends on food items supplied from different provinces, including beef, pork and vegetables, and travel restriction may impact the prices of food products in the capital.

According to the Lao Statistics Bureau, the cost of food and non-alcoholic beverages surged by 2.81 percent year-on-year, and 0.94 percent month-on-month.

For instance, the price of rice rose by 1.41 percent month-on-month, and the rates of fish and seafood by 2.03 percent.

The price of pork surged by 14.25 percent year-on-year, beef by 8.8 percent, poultry by 1.3 percent, fresh vegetables by 8.62 percent, and seasonings by 12.64 percent.

The cost of household goods went up by 0.22 percent month-on-month, and 3.17 percent year-on-year. The price of internal decoration items went up by 4.4 percent year-on-year, furniture by 2.33 percent, mattresses and mattress pads by 5.1 percent, and kitchen items by 2.71 percent.

Prices of medical care items climbed by 0.16 percent month-on-month and 3.36 percent year-on-year, and the cost of medicines and medical equipment increased by 2.54 percent year-on-year. The cost of medical treatment in hospitals rose by 4.15 percent year-on-year.

Costs in the communication and transport category rose by 1.1 percent month-on-month and 3.41 percent year-on-year. For instance, the price of vehicles rose by 3.15 percent year-on-year, transport items by 5.29 percent and fuel by 10.36 percent.

The value of beauty services surged by 1.04 percent year-on-year, precious metals by 22.52 percent, and decorated gold by 27.87 percent.

In 2020, inflation in Laos averaged at around 5.07 percent, up from 3.32 percent recorded in 2019.

The government has encouraged local farmers to boost their productivity in order to minimise imports from neighbouring countries. However, domestic production is still not as strong as anticipated and it is still unable to meet the market demands.

For instance, red onions, garlic, carrots and mushrooms have to be imported since the production cost for these crops remains high in Laos.