The year-on-year inflation rate in Laos surged 8.5 per cent in March, even more than expected, and rose to the highest figure recorded since January 2016.

The Covid-19 pandemic, together with volatile fuel prices and the continuing depreciation of the kip, are the main factors driving consumer prices in Laos, according to the latest report from the Lao Statistics Bureau.

The spiralling cost of fuel on the world market forced the government to raise the retail price of petrol three times in March. Since the beginning of this year, the government has adjusted fuel prices nine times, raising the price eight times and lowering it once.

Rising oil prices are impacting the transport price index, causing an increase in the price of goods that depend on fuel for their production or transport.

The growing demand for US dollars and Thai baht is making it difficult for authorities to curb inflation because businesses must buy foreign currencies at a high rate on the parallel market so they can import goods and materials.

In addition, the price of gold has jumped to new high on the world market.

The rising cost of living is creating economic uncertainty across the world. In the UK, inflation hit a 30-year high in January with consumer prices up 5.5 per cent from the previous year, while in the US consumer prices surged 7.5 per cent year-on-year as of January, the biggest annual increase in 40 years.

In Laos, consumer prices surged more than expected over the past seven months, with inflation being recorded at above five per cent since December last year.

Many people have complained that their incomes are not rising in line with inflation, which means large numbers are experiencing financial hardship.

In March, costs in the communications and transport category rose by 3.8 per cent month-on-month, and 18.7 per cent year-on-year. Rising fuel prices forced transport operators to bump up their prices when the price of fuel and gas rose by 49.7 per cent year-on-year in March.

In the meantime, prices in the goods and service category surged by 2.8 per cent month-on-month and 13.3 per cent year-on-year.

Meanwhile the cost of medical care and medicines increased by 0.8 per cent month-on-month and 10.1 per cent year-on-year. The surge in this category was driven by the price of medicine and hospital fees.

Prices in the restaurant and hotel category rose by 1.4 per cent month-on-month and 9.3 per cent year-on-year.

In addition, prices in the housing, water, electricity and gas category rose by 1.7 per cent month-on-month and 7.4 per cent year-on-year while the cost of clothing and footwear surged by 1.6 per cent month-on-month and 7.9 per cent year-on-year.

The cost of food and non-alcoholic beverages increased by 1.4 per cent month-on-month and 6.1 per cent year-on-year.