Laos inflation rises more than 40% in February

The inflation rate in Laos rose to 41.3% in February, government figures show, a huge jump from just 2% at the same time last year, despite drastic measures taken by authorities to control the crisis.

The government has ordered import restrictions and the closure of all private exchange houses in the country, allowing only banks to exchange foreign currencies.

The rise in inflation has been driven by a depreciation of the Lao currency, the kip, and declining foreign investment.

But some residents say the government’s new import limits have worsened the crisis as domestic industries do not produce all the supplies needed by factories.

“Laos doesn’t have enough goods to produce itself, so we have to import from Thailand,” said a resident of the capital Vientiane, speaking on condition of anonymity for security reasons like others in this report. “If the prices in Thailand went up, the prices in Laos also went up. If the Thai baht goes up, the Laotian kip goes up too.”

Some traders have been forced to raise prices, further exacerbating the crisis.

“A bottle of vegetable oil sells in my shop for almost 40,000 kip (about US$2.35) and I make a profit of 2,000 kip (12 US cents),” a Vientiane-based trader told RFA. “Our government has a one-party system, so we can only listen to what they decide and we can’t go against it.”

Low-income workers and government employees, whose wages have not kept up with rising prices, have been hardest hit.

“A kilogram of pork or beef costs more than 100,000 kip (US$5.90), before it was between 80,000 and 90,000 kip (about US$4.70 to 5.30).” said a villager in Savannakhet province.

In Luang Prabang, a Laotian woman said that locally grown vegetables and other products sell for a somewhat stable price, but imported products are more expensive. “Meat prices never go down because of limited supplies,” she said.

An Asian Development Bank official in Laos had earlier said the government “should pay more attention” to inflation and called for urgent measures to tackle the problem.

Translated by Sidney Khotpanya. Edited by Nawar Nemeh and Malcolm Foster.