Report: Food prices the cause of mounting inflation in Laos

Content image - Phnom Penh Post
The Lao National Statistics Bureau has attributed the growth of the annual Consumer Price Index (CPI) to rising food prices. pUBLIC DOMAIN

THE inflation rate continued to rise in March, with the Lao National Statistics Bureau attributing the growth of the annual Consumer Price Index (CPI) due to rising food prices, and not the depreciation of the kip as many people believed.

The statistics bureau, which serves as a department of the Ministry of Planning and Investment, on Tuesday posted the latest inflation report on its website, highlighting the causes of inflation.

 

According to the report, which Vientiane Times obtained this week, the Consumer Price Index (CPI) rose to 105.19 points in March – a growth rate of 1.66 per cent compared to the corresponding period last year. This growth rate was higher than in February, when it was calculated at 1.57 per cent.

The report also indicates that the driving force of inflation in March was the rising annual index in the food and non-alcoholic drinks category.

In March, this index reached 104.41 points or a 1.27 per cent change compared to the same period last year.

This increase in the CPI index made a significant contribution to the growth of inflation in March. This influence was due to the fact that the inflation weight domination was high, the bureau said in an executive summary of the report.

The second driving force of the March inflation rate was the communication and transport category. In March, the goods and services category saw a 2.83 per cent change compared to the same period last year. Although this change was greater compared to the change in the food category, its influence on the inflation rate was low.

The annual growth rate in the clothing and shoe category was cited as the third driving force of March inflation. This category index saw a 3.77 per cent change compared to the same period last year.

 

‘Inflation remains low’

The bureau’s report concluded that despite inflation continuing to increase in March, it remained at a relatively low level.

According to the report, policy factors which may influence the inflation rate were orders by the commerce ministry and relevant sectors to suspend imports of pork from China and Vietnam following the outbreak of animal diseases there.

The price of pork saw a minor drop in March compared to February but was still seen as growing compared to the same period last year.

One of the significant issues highlighted by the bureau was that the depreciation of the kip had little impact on rising inflation. This finding goes against public perception, which holds that because more than 50 per cent of the goods on sale in Laos are imported from Thailand the value of the kip has depreciated against the Thai baht, resulting in some degree of inflation.

The bureau explained that most of the items imported from Thailand were electronic equipment, clothing and vehicles. It said the rise in price of these goods had no significant impact on the overall inflation rate in Laos. VIENTIANE TIMES/ANN