In July, Laos continued to grapple with high inflation, with the rate slightly decreasing to 26.1 percent from June’s peak of 26.2 percent. The Consumer Price Index (CPI) also climbed from 234.5 in June to 239.8 in July, highlighting the rising cost of living in the country.
According to the Lao Statistics Bureau, the healthcare and medicine sector experienced the most significant price increase, soaring by 39.9 percent. Other sectors with notable price hikes included restaurants and hotels at 34.4 percent, and shelter, water, electricity, and cooking fuel at 34.1 percent. Additionally, prices for home appliances, alcohol and tobacco, and food and non-alcoholic beverages also saw significant rises.
Within the healthcare and medicine sector, there were substantial increases in the prices of pharmaceutical products and children’s medicines. Transportation costs, including fuel, automobiles, and motorcycles, also experienced notable rises, further straining the budgets of Lao citizens.
The country has seen considerable fluctuations in exchange rates, particularly against the Thai baht. On 26 July, Lao commercial banks, including BCEL and Phongsavanh Bank, adjusted their rates up to five times, with the baht falling from over LAK 700 to just above LAK 620.
These currency fluctuations have also impacted gold prices in Laos. Local shops have been adjusting prices on weekends when the global market is closed, leading to confusion among residents and customers.
In response to these economic challenges, Soulisack Thamnouvong, Director General of the Monetary Policy Department at the Bank of Laos (BOL), recently stated that the central bank is working with sectors such as tourism, mining, and agriculture to enhance foreign investment and increase currency inflows. He highlighted that Laos’ financial challenges are driven by external factors like shifts in major economies’ financial policies and internal issues, including high demand for foreign currencies due to imports, debt repayments, and persistent trade deficits.
Additionally, in a recent government cabinet meeting, President Thongloun Sisoulith directed the government to urgently address inflation and halt the depreciation of the kip as part of a broader strategy to tackle the country’s financial difficulties. The government’s actions will be crucial in stabilizing the economy and alleviating the financial strain on Lao citizens.
