Laos inflation edges higher – 8% in reach

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lao-marketThe inflation rate in Laos reached 6.87 per cent in September, up from 6.83 per cent in August, according to a report issued by the Lao Statistics Bureau this week.

Economists say inflation could exceed the economic growth rate of 8 per cent in the near future because Laos imports more than it exports. The rise in the September inflation rate was mainly driven by price increases in the categories of food and non-alcoholic beverages, clothing and footwear, alcohol and tobacco, housing, water, electricity and cooking gas, education and restaurants and hotels.

Prices in the alcohol and tobacco category increased by 1.71 per cent month-on-month, while the clothing and footwear category saw an increase of 1.08 per cent. Prices in the education category rose by 1.07 per cent, while those in the restaurant and hotel category increased by 1.32 per cent.

The country’s highest inflation rate in 2013 so far was 7.43 per cent in July, while the lowest rate was 5.45 per cent in April. In 2011, the average inflation rate was 7.58 per cent but dropped to 4.26 per cent in 2012.

Laos has one of the highest inflation rates of all ASEAN countries due to the rising value of imports. A government report states that in the past six months of the 2012-13 fiscal year the value of exports reached $880 million while the value of imports exceeded $1.16 billion.n The main items imported were vehicles and spare parts, industrial products, fuel and gas, construction equipment, and food products.

Government spokesperson Bounpheng Mounphosay told local media recently that the government was concerned about the country’s rising inflation and debt as it could lead Laos into economic crisis. A revenue shortfall has also affected various projects in the country and the International Monetary Fund (IMF) has warned that Laos must take steps to avoid a financial crisis.

The revenue shortfall has forced the government to rein in expenditure, including halting a 760,000 kip (around $100) monthly living allowance for state employees and encouraging thrift. Critics say the government needs to impose concrete measures to curb inflation, notably the regulation of food prices which are considered the main driver of inflation. It is seen as essential to boost domestic production for in-country consumption and for export, as this would earn foreign currency while reducing imports.

Another problem is that Laos relies on the export of natural resources such as mining products, which is considered unstable. Natural resources do not constitute a sound economic base because they will one day be depleted.

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Reading Time: 2 minutes

The inflation rate in Laos reached 6.87 per cent in September, up from 6.83 per cent in August, according to a report issued by the Lao Statistics Bureau this week.

Reading Time: 2 minutes

lao-marketThe inflation rate in Laos reached 6.87 per cent in September, up from 6.83 per cent in August, according to a report issued by the Lao Statistics Bureau this week.

Economists say inflation could exceed the economic growth rate of 8 per cent in the near future because Laos imports more than it exports. The rise in the September inflation rate was mainly driven by price increases in the categories of food and non-alcoholic beverages, clothing and footwear, alcohol and tobacco, housing, water, electricity and cooking gas, education and restaurants and hotels.

Prices in the alcohol and tobacco category increased by 1.71 per cent month-on-month, while the clothing and footwear category saw an increase of 1.08 per cent. Prices in the education category rose by 1.07 per cent, while those in the restaurant and hotel category increased by 1.32 per cent.

The country’s highest inflation rate in 2013 so far was 7.43 per cent in July, while the lowest rate was 5.45 per cent in April. In 2011, the average inflation rate was 7.58 per cent but dropped to 4.26 per cent in 2012.

Laos has one of the highest inflation rates of all ASEAN countries due to the rising value of imports. A government report states that in the past six months of the 2012-13 fiscal year the value of exports reached $880 million while the value of imports exceeded $1.16 billion.n The main items imported were vehicles and spare parts, industrial products, fuel and gas, construction equipment, and food products.

Government spokesperson Bounpheng Mounphosay told local media recently that the government was concerned about the country’s rising inflation and debt as it could lead Laos into economic crisis. A revenue shortfall has also affected various projects in the country and the International Monetary Fund (IMF) has warned that Laos must take steps to avoid a financial crisis.

The revenue shortfall has forced the government to rein in expenditure, including halting a 760,000 kip (around $100) monthly living allowance for state employees and encouraging thrift. Critics say the government needs to impose concrete measures to curb inflation, notably the regulation of food prices which are considered the main driver of inflation. It is seen as essential to boost domestic production for in-country consumption and for export, as this would earn foreign currency while reducing imports.

Another problem is that Laos relies on the export of natural resources such as mining products, which is considered unstable. Natural resources do not constitute a sound economic base because they will one day be depleted.

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