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Inflation in Laos dips but remains high in August
Publication Date : 12-09-2013
Although Laos' inflation rate declined in August to 6.8 per cent, down from July's figure of 7.4 per cent, the figure remained high, the Lao Statistics Bureau reported this week.
Inflation was mainly driven by price rises in four categories: food and non-alcoholic beverages; restaurants and hotels; housing, water, electricity and cooking gas; and communications and transport.
In the food and non-alcoholic beverages category the August inflation rate was 14 per cent, down from 14.5 per cent in July, while in the restaurant and hotel category the rate dropped from 7.9 per cent in July to 7.1 per cent in August.
In the housing, water, electricity and cooking gas category, inflation fell from 4.5 per cent in July to 3.3 per cent in August, while in the communications and transport category it dropped from 1.7 per cent in July to 0.6 per cent in August.
The report noted that the increase in inflation in the food and non-alcoholic beverages category was small because the price of beef, vegetables and fruit did not change much.
However, compared to last year, the August inflation figure was high because of the increase in the price of rice.
The increase in inflation in the housing, water, electricity and cooking gas category tended to decline because prices in this category have fallen slightly since March, particularly the price of construction equipment.
Although the inflation rate in the restaurant and hotel category was high, it was not the main factor in driving inflation as a whole. Laos' high inflation rate is attributed to the country's heavy dependence on imports.
According to a government report, in the past six months of the 2012-13 fiscal year the export value reached US$880 million while the value of imports exceeded US$1.16 billion.
The main items imported were vehicles and spare parts, industrial products, fuel and gas, construction equipment, and food items.
In 2011, the average inflation rate stood at 7.58 per cent but dropped to 4.26 per cent last year.
This year, the lowest inflation rate was recorded at 5.45 per cent in April, while the highest rate was 7.4 per cent in July.
However, the inflation rate remains lower than the rate of economic growth, which stands at 8 per cent in line with the government's target.
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.
Laos also 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.