According to a report from the Lao Statistics Bureau, the CPI stood at 114.97 points in September, resulting in an inflation rate of 4.63 percent, down from the 5.84 percent recorded in August.
It is no surprise that inflation is driven by the rising price of food and other imported products as the country imports more than it exports, local daily Vientiane Times reported on Wednesday.
Fluctuation in currency exchange rates is one of the main reasons for the inflated cost of living in Laos because many traders rely on parallel markets to buy the foreign currencies they need to import goods.
The COVID-19 pandemic is also disrupting exports, the inflow of foreign visitors and foreign investment in Laos, which are considered to be the main sources of Laos' foreign currency earnings.
In addition, domestic productivity is not as strong as it should be due to the fact that Laos has to import large amounts of machinery and other equipment, further impacting product prices.
Laos buys huge quantities of food from neighboring countries, including seafood. In addition, the rainy season made it difficult for farmers to grow sufficient crops to meet market demand, said the report.
In 2019, the inflation rate averaged 3.32 percent, according to the Bank of the Lao PDR (BOL), the central bank. Inflation soared to 6.94 percent in January 2020 before dipping to 6.24 percent in February, 6.14 percent in March, 5.84 percent in April, 5.46 percent in May, 5.28 percent in June, 5.12 percent in July and then rising to 5.84 percent in August.
According to the Lao Statistics Bureau, the value of the kip fell by 4.29 percent against the U.S. dollar and 10.3 percent against the Thai baht in July, compared to the same month in 2019.
The Lao government is attempting to cap rising food prices by pushing for greater domestic productivity to minimize the need for imports.
However, the volume of goods produced in Laos does not come close to meeting market demand, and large quantities of food items must still be imported from Thailand.