The Lao inflation rate continued to decline in July thanks to low food
prices, especially rice.
According to a report from the
Ministry of Planning and Investment’s Lao National Statistics Bureau, the
inflation rate in July was 2.9 percent, dropping from 3.56 percent in June
thanks to falling prices of food compared to the previous year.
The Lao inflation rate has
continued to drop since the beginning of the year. The inflation rate was 6.69
percent in January, 6.11 in February, 5.33 in March, 4.37 in April and 3.77 in
May, thanks to a high base level last year.
The National Statistics Bureau
says that one of the main causes which made the inflation rate in July lower
than June, was the falling price of rice, one of the main inflation indexes in
the 12 Lao goods and services categories, and fuel prices.
In the food category the price of
rice remains low at 3.6 percent as the government has restricted the export of
rice to foreign countries fearing that a shortage of supply in the commodity
could cause higher inflation. An increasing input of irrigated rice also helps
to secure the supply of rice over this wet season.
Despite a sufficient supply of
rice at present, economists warn that Laos could face a price hike should
farmers stop selling rice until the new harvest season. Difficulty with the
transportation of rice between production bases and markets could also cause a
price hike.
Over the past several months the
price of food has played an important role in driving the inflation rate in
Laos, forcing the government to stockpile rice and release stocks to the market
when the price increases.
Despite the falling price of
rice, the price of pork, beef and chicken remains high. The government has set up
reference prices for these goods but a number of traders have ignored them.
Trade officials admitted that it was not easy to control the price of pork as
demand for the meat is high.
“We have ordered foreigners to
stop raising pigs as this business is reserved for Lao people, so there is
currently a shortage of supply in Vientiane,” said one of the officials.
According to the Lao National
Statistics Bureau, one of the main reasons for a lower rate of inflation in
Laos was a lower fuel price thanks to lower prices in the world market. The
government lowered the price of fuel several times over the past few months.
The National Statistics Bureau
says that one of the main challenges for Laos to maintain low inflation, is to
control the price of water and electricity supply, after finding out that
household goods saw about a 19 percent increase after the government decided to
increase the prices of electricity and water supply.
Source: Vientiane Times
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