Source: Vientiane Times
The inflation rate in Laos hit 23.6 percent year-on-year in June, the highest figure ever recorded since May 2000 as surging prices of energy and consumer goods continue to deepen hardship and create new pains for the Lao public.
The soaring price of fuel, gas and other imported goods, compounded with the depreciation of the kip, are among the main factors driving inflation, according to the latest report from the Lao Statistics Bureau.
The consumer price index jumped sharply above expectations and the ceiling rate of 12 percent set by the government.
Laos has one of the highest inflation rates in Southeast Asia, with many low-income earners struggling to afford basic necessities.
In June, the price of fuel, gas and gold surged by 107.1 percent, 69.4 percent and 68.7 percent year-on-year respectively.
In addition, the cost of food, seasonings, non-alcoholic beverages, clothes, footwear, medicine, construction equipment, vehicles, spare parts and other imported goods rose significantly.
The kip continues to depreciate despite the government’s measures to stabilise currency exchange rates.
Many business owners are concerned that fluctuating exchange rates will cause them to operate at a loss.
Exacerbating the situation, the Russia-Ukraine conflict has resulted in a volatile global fuel market amid fears of a global economic shock and possible food crisis.
The price of oil is continuing an upward trend as the government struggles to provide sufficient petrol to meet public demand.
In June, authorities hiked the price of oil three times in line with rising costs on the world market, impacting the transport sector and driving up the cost of production and the price of products at local markets.
As fuel is essential for driving economic growth and food production, the government recently issued a letter of credit pledging 200 million litres of fuel to importers.
This will enable importers to buy 200 million litres of fuel, which will cover the requirements for July and August of 100 million litres a month.
In March, the year-on-year inflation rate was recorded at 8.54 percent, rising to 9.86 percent in April and 12.8 percent in May.
The inflation rate of 23.6 percent recorded in June is the highest in more than two decades.
In 2000, inflation averaged 26.95 percent, with the highest rate reported in January at 75.75 percent, declining to 58.74 percent in February, 45.39 percent in March, 34.87 percent in April, and 31 percent in May.
According to the Lao Statistics Bureau, the highest surge in consumer prices in June this year was recorded in the communications and transport category, at 55.5 percent year-on-year.
This was followed by household goods (22.3 percent year-on-year), the goods and service category (29.7 percent), hotel and restaurant category (20.7 percent), and housing, water, electricity and gas category (20 percent).