The recent inflation rate published by the Bank of Lao PDR (BOL), shows signs of a weakening economy as year-on-year inflation rises.
The year-on-year inflation rate from June this year was 28.64%, a significant decrease from last month‘s figure of 38.86%, but higher than last year’s rate of 23.61% for June.
According to the Inflation Report by the Lao Statistics Bureau, price of food and non-alcoholic beverages increased by 42.73%, along with an increase of 25.09% in health and medical equipments this month.
Transportation costs rose by 10.96% compared to June 2022, with a 3.58% rise from last month alone.
Hotel and restaurant rates increased by 28.78% compared to same time last year, and by 2.26% from May.
Sectors which saw the least amount of inflation were, education at 0.20%, postal services at 0.44% and events and entertainment sector at 0.50%.
The continued devaluation of the Lao Kip (LAK) has also played a crucial role in the current weakening economic situation in Laos, but the BOL has rolled out a policy to stimulate the economy and improve the value of LAK.
The new scheme by BOL allows commercial banks to have more flexibility in setting exchange rates based on daily reference rates set by the BOL, thereby closing the gap between official and unofficial market rates.
Meanwhile, despite runaway inflation, the country’s economists remain optimistic, forecasting 4.5% economic growth this year.