Runaway inflation in Laos has caused the prices of food, petrol and other essentials to nearly double in the past year, some in the last month, sources in the country told RFA.
Inflation in the country is closely related to the value of the kip relative to other currencies as the country relies heavily on imports for most of its consumer needs. On Friday, US$1 was worth about 13,950 kip, compared to 9,420 kip a year ago, a depreciation of about 48%.
The sudden spike in food prices is making life difficult, sources told RFA.
“On Saturday 28th May 2022 I gave 2,000 kip [$0.50] to my 12-year-old son to buy eggs for his lunch from a nearby shop,” a mother in the capital Vientiane, who like all other unnamed sources in this report asked not to be identified for security reasons, told RFA on Tuesday.
“At first I thought the 2,000 kip could buy my son two eggs. But when he came home with just one egg, I was surprised that the price of an egg has doubled since late last year,” she said.
Six months ago, a pack of instant noodles in Vientiane’s Hatxayfong district cost 20,000 kip, now it costs 40,000, a resident there told RFA.
“The price of everything doubles,” she said.
Pork in Pakse, a city in southern Champasak province, now costs 55,000 kip per kilogram (2.2 pounds), up from 30,000 kip, a resident said.
“Food prices are increasing every day. The government needs to solve the problem,” the person said.
According to data from the Lao Statistics Bureau and RFA Lao, the cost of buying rice, beef, pork or eggs has increased significantly in the past month alone. Eggs have doubled in price.
Inflation is not limited to food. Gas prices rose on June 1 for the 13th time this year, according to the Lao Ministry of Industry and Trade.
Regular unleaded gasoline rose from 23,770 kip per liter ($6.46 per gallon) to 28,070 per liter ($7.64 per gallon)
Gasoline prices are so high that “a lot of people drive across the Mekong to visit it [Thailand] and buy cheaper gasoline and other consumer goods,” a motorist in Vientiane told RFA.
“We have to adapt to the new normal, so change our lifestyle,” another motorist told RFA
“For example, I only drive my car when absolutely necessary, and I sometimes go to Thailand to buy cheaper gasoline, vegetable oil, fish sauce and other groceries.”
A petrol station owner in Thailand confirmed the trend. He told RFA that two weeks ago he noticed a sharp increase in customers from Laos.
“Most of them buy consumer goods and put gas in their cars on the way home,” he said.
Public transport costs are also increasing.
“From June 1, 2022, a Laos-China train ticket to the capital Vientiane will cost 242,000 kip at the ticket office and 262,000 kip in the shops, versus 198,000 kip,” a ticket seller in Luang Prabang city, Luang Prabang province said.
Train fares are unaffordable for most people, a villager in northern Luang Prabang province told RFA.
“Most people are suffering from severe gas shortages and inflation, and now you have high train fares,” he said. “I want to see lower prices because everything is going up.
Farmers in Laos have had to deal with a double whammy of inflation and shortages of some of the products they need to do their jobs. The combination has delayed plowing in southern Attapeu province, a provincial official told RFA.
“These farmers are poor and cannot afford petrol. They just sit there and wait for gas prices to go down,” he said.
Small businesses are also suffering from the harsh economic climate, a Vientiane businessman told RFA.
“Half of all SMEs [small-to-medium enterprises] are dead. They cannot survive the high gas prices and lack of stores. The other half is fighting.”
The World Bank reported that inflation in Laos rose to 9.9% in April this year from just 2% in January 2021. The bank recommended the country stabilize the kip, push for more agricultural production, work to attract more investment and create more jobs.
A Laotian financial expert told RFA that the country needs to change the way it does business in order to survive.
“One of the solutions would be that we import less goods. We can’t afford to buy as much as we used to because we have less foreign money,” he said. “The other solution would be that we produce more domestically.”
PDR Laos National Bank governor Sonexay Sitphaxay told reporters May 27 that the government is trying different approaches to solve its problems.
“[We] seek to divert foreign currency from the black market into the banking system, punish moneychangers and manipulators, reduce the impact of inflation on society, negotiate with trading partners and persuade them to accept the kip, and reduce the need for foreign currency.” he said.
One economist told RFA: “First, the government should stabilize the kip, increase foreign exchange reserves and expand the economy sustainably.”
But recovery for Laos will take time, an Asian Development Bank official said.
“[It] will be slow this year and for the next few years due to COVID-19, the stronger US dollar and the crisis in Ukraine,” he told RFA. “While the purchasing power of Lao people is lower, the Lao economy could pick up again in 2-3 years.”
Translated by RFA’s Lao Service. Written in English by Eugene Whong.
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