The year on year inflation rate in Laos surged to 9.9 percent in April, the highest figure recorded since January 2016, according to the latest report from the Lao Statistics Bureau. The consumer price index jumped at its fastest pace in recent months, further putting the squeeze on consumers with more to be paid for food, fuel and other essentials Laos has one of the highest rates of inflation in Southeast Asia, mainly driven by rising oil prices and the continuing depreciation of the kip.
The Russia-Ukraine conflict has resulted in a volatile. global fuel market, heightening geopolitical uncertainty and impacting on prices of consumer goods in Laos, exacerbated by the continuing Covid pandemic. The price of fuel surged by 11.4 percent month-on-month (with regular grade rising by 5.1 percent and diesel by 15.7 percent) and 86.3 percent year-on-year (regular grade petrol rising 72 percent and diesel 96.6 percent).
In addition, the price of engine oil, along with gold, went up by 2.9 percent and 8.9 percent month-on-month and 14.5 percent and 36.8 percent year-on-year respectively, according to the Lao Statistics Bureau. Since the start of this year, authorities have hiked fuel prices numerous times, forcing transport operators to bump up their prices. The continuing depreciation of the kip against the Thai baht and US dollar means businesses have to spend more to buy the foreign currencies needed to import goods.
The kip has suffered the biggest loss in value against the baht and dollar since the Asian financial crisis in 1997-1998. The kip has plunged to its lowest value in decades due to a supply-demand mismatch. BCEL exchange rates on June 14, 2017, saw USS1 buy 8,216 kip and sell for 8,256 kip, one baht buy 242.93 kip and sell for 244.74 kip. A recent day of the exchange rate on 27 May 2022, US1$ bought 13.405 kip and sold for 13.431 kip, with one baht buying 437.48 kip and selling for 440.73 kip. The government's attempt to tackle the rising price of fuel and inflation has been hampered by the continuing depreciation of the kip.
In April, costs in the communications and transport category rose by 6.7 percent month-on-month, and 26.9 percent year-on-year. In the meantime, prices in the goods and service category surged by 3.4 percent month-on-month and 16.3 percent year-on-year. The cost of medical care and medicines increased by 0.7 percent month-on-month and 11 percent year-on year. The surge in this category was driven by the price of medicine and hospital fees. Meanwhile, the cost of clothing and footwear rose by 1 percent month-on-month and 9.4 percent year-on-year. In addition, prices in the housing, water, electricity, and gas category rose by 1.7 percent month-on-month and 9 percent year-on-year. The cost of food and non-alcoholic beverages increased by 1.8 percent month-on-month and 5.7 percent year-on-year.
Resource: Vientiane Times, May 9, 2022.
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