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Monday, July 15, 2024

Cost of Living Rises as Lao Currency Depreciates

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A weakened local currency (LAK) has caused the cost of living to rise in Laos, as well as affecting businesses amid the Covid-19 pandemic.

According to a report by Lao Post, the current financial climate has weakened the Lao Kip against both the US dollar and the Thai baht, the two major currencies traded in the Lao market.

Food prices have increased by 4.71 percent this year, while clothing prices have increased by 4.17 percent, furniture prices have increased by 3.84 percent, and medicines have increased by 4.93 percent.

Transportation costs have increased by 1.3 percent, and valuable items have increased by 10 percent, according to a report issued by the Economic Research Institute for Industry and Trade (ERIT), under the Ministry of Industry and Commerce.

The Covid-19 crisis has had an effect on businesses in Laos, as well as the weakened Lao currency, which has driven up product prices with most raw materials imported.

Consumers, particularly those with low incomes, have been heavily impacted by the high cost of living.

“Prices of fresh food such as beef, pork, vegetables, and fish have increased even in domestic production,” said a resident of Vientiane Capital, “but all the vendors blame it on the strong Thai Baht (THB).”

The Lao Kip against the USD averaged 9,324 (LAK/USD) in Feb 2021, compared with 9,295 LAK/USD in the previous month, while the baht has risen to 340 LAK/THB.

Meanwhile, the Lao Kip exchange rate against the US dollar was lowest at 8,490 LAK/USD in September 2018, while THB was lowest at 240.246 LAK/THB in May 2017.

Authorities set new electricity rates for households, organizations, and businesses this month throughout the country, ending the special discounts provided during the lockdown period and increasing the burden on households affected by Covid-19.

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