Inflation In Laos Remains Sore Point For The Poor
Source: Vientiane Times
The Consumer Price Index (CPI) remains high in Laos despite the government increasing measures to curb rising prices at Lao markets.
According to a report from the Lao Statistics Bureau, the CPI reached 113.15 points in July, putting the annual inflation rate at 5.12 percent.
The fluctuation of the exchange rate is one of the main factors driving inflation in the country as entrepreneurs have to spend more money to buy foreign currencies to import goods.
Inflated prices were mainly driven by categories related to food and non-alcoholic beverages, tobacco, clothing, footwear and medicines.
Although inflation in the food and non-alcoholic beverage category declined in July compared to June, it remained high.
The price of the food and beverages increased by 8.79 percent in July compared to the figure recorded last year. The move comes as Laos still imports huge quantities of food items, including seafood from neighbouring countries.
According to the report, the price of rice went up by 16.08 percent per annum, pork 19.38 percent, beef 7.9 percent, poultry 6.3 percent, fish and seafood 4.3 percent and fruit 3 percent.
Meanwhile, prices in the clothing and footwear category rose by 5.25 percent, household items 5.22 percent, medicine and healthcare 5.49 percent and services 10.23 percent.
Clothing and footwear businesses are directly linked with exchange rates and the Lao kip has depreciated by 10.23 percent against the Thai baht since last year, according to the Lao Statistics Bureau.
Last year, the inflation rates averaged 3.32 percent, according to the Bank of Lao PDR.
The figure jumped to 6.94 percent in January this year before decreasing to 6.24 percent in February, 6.14 percent in March, 5.84 percent in April, 5.46 percent in May and 5.28 percent in June.
One of the most significant features to note is that the price of jewellery surged by 32.9 percent year-on-year. For instance, gold products soared by 39.9 percent.
Gold jewellery prices in Laos on Wednesday were more than 9 million per baht-weight (15 grams).
Gold is considered an enduring asset while money is not. Many countries move to store gold products when currencies are weak. This is one of the main reasons why the gold price on the world market is rising.
The coronavirus pandemic continues to impact the Lao economy, affecting the tourism, investment, and export sectors which are considered key areas for generating foreign currency in Laos.
The virus impacted supply chains, hindering productivity, with many companies halting part of their business activities.
Even though the government has pushed for greater agricultural production in the country, it’s not sufficient to meet the demand, coupled with the impact of natural disasters across the country, leading to a shortfall of some crops and vegetables for local markets.
Early this year, the government attempted to control the price of pork after merchants blamed middleman for raising the price.
However, it’s quite challenging for authorities to manage food prices because many products are imported against the backdrop of fluctuating exchange rates. Whatever factors affect the prices of products, those who suffer the most are the poor.