Inflation Rate Climbs Above 3 Percent
Source: Vientiane Times
The Lao inflation rate continued to increase above 3 percent in September despite the government introducing a number of measures to control the price of goods in local markets.
The Lao National Statistics Bureau announced this week that the Consumer Price Index (CPI) reached 105.73 points in September, increasing from 104.96 points in August.
The continued increase of the CPI resulted in a 3.06 percent year-on-year increase of goods prices in Laos. In August, the Lao inflation rate was 2.57 percent.
The estimation of the monthly inflation rate in Laos was based on the change in prices of 12 goods and services categories. The bureau’s officials collected price data from around the country every month and reported their findings on its official website.
Although the Lao National Statistics Bureau has updated the latest inflation rate in the country, it did not provide further details on the factors driving the growth of inflation.
However, it is understood by many people that the increase in prices of fuel and the depreciation of the Lao kip against major foreign currencies is driving the inflation rate up.
The prices of fuel continued to increase over the past few months despite the government cutting some of the fees it imposes on fuel. The price of fuel saw an increase of more than17 percent in August, compared to the same period last year.
Government officials said that despite the government attempting to lower some of its fuel tax charges; it could not control fuel prices as the price of this commodity continued to rise in the world market. The World Bank estimated the price of fuel would continue to grow over the coming months.
In addition to rising fuel prices, the depreciation of the Lao kip against the US dollar and Thai baht also played a role in Lao inflation growth. This conclusion is based on the fact that a majority of goods sold in markets across the country are imported.
According to information from the Bank of the Lao PDR, which cites the Lao National Statistics Bureau as a reference, the Lao inflation rate was only 0.95 percent in January this year, 1.88 percent in April and 2.57 percent in August.
Despite the continued increase of the inflation in Laos, it is still low when compared compared to the rates of other Asean countries. The rate of inflation in Laos was 2.57 percent in August, while it was nearly 4 percent in Vietnam and 6.4 percent in the Philippines in the same month.
Observers said the government had urged the Bank of the Lao PDR to keep money supply under control in accordance with the advice from the National Assembly. This measure is viewed as an attempt to keep inflation low.
In addition to this, the government has urged economic state agencies to boost goods and services productivity as part of efforts to stabilise the price of goods and services. However, the business sector said it needs incentives and support from the government for its operations.
The government has been aware of the situation and is now attempting to solve the problem systematically.