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Home  >>   Daily News  >>   Laos News  >>   Economy  >>   Laos inflation drops below GDP
NEWS UPDATES Asean Affairs                       22  August 2011

Laos inflation drops below GDP

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The inflation rate in July was 7.13 percent, the first time in three months it has being below target gross domestic product (GDP) growth.

The inflation rate in Laos dropped substantially in July as the government increased efforts to address months of rising prices in the country.

The Ministry of Planning and Investment’s Statistic Bureau announced yesterday that the inflation rate was 7.13 percent in July, marking the first time in three months that the annual Consumer Price Index (CPI) has been below the projected annual GDP growth of 8.3 percent for this fiscal year.

Inflation was recorded at 9.24 percent in April, forcing the government to hold an urgent meeting with the involved sectors to address the issue. The inflation rate continued to increase to 9.76 percent in May and 9.52 percent in June, before dropping to 7.13 percent in July.

According to the bureau, the main driving forces of inflation in July were rising prices in the food and non-alcoholic beverages category, which recorded 9.42 percent growth compared to the same period last year, higher prices in the communication and transport category, which increased by 10.84 percent, and prices for general goods and services, which recorded 8.13 percent growth.

Prices for household goods, water and electricity supply, and cooking gas increased by 4.30 percent, restaurant and hotel services 4.96 percent, clothes and shoes 3.69 percent and alcoholic beverages and cigarettes increased by 3.94 percent.

Prices in the entertainment and recreation category saw annual growth of 1.54 percent, health care 2.18 percent and household wares 1.97 percent. However, prices for education services decreased by 0.65 percent.

The bureau also reported that the CPI increased by 0.38 percent month-on-month in July, adding that the price of Grade A sticky rice reached 6,758 kip (US$83 cents) per kg, increasing from 6,640 kip in June.

The price of Grade B beef in July was 31,528 kip per kg, up from 31,264 kip a kg the month before, while pork prices rose from 29,440 kip per kg in June to 30,690 kip in July. Prices for almost all vegetables rose sharply in July due to recent flooding and the wet season making it difficult to grow such crops.

The Bank of the Lao PDR has stopped releasing loans for state infrastructure projects and continues to sell bonds to reduce the money supply. The bank has said it will continue to keep its interest rate for loan periods of between two weeks and 1 year at 12.50 percent and its reserve requirement at 5 percent for Lao kip and 10 percent for foreign currencies.

The central bank has said it will encourage commercial banks to provide low interest loans to assist farmers to boost production activities and traders to stockpile imported goods to ensure sufficient supply in the country.

The government has asked the Lao National Economic Research Institution to study the price structure of goods in Laos to enable it to continue to introduce measures to address the high inflation rate.


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AseanAffairs   04 January 2011
By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

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