A vendor sells chillies, limes and tomatoes at a market in Vientiane. –Photo Lao Aussie Fresh Market

Inflation slows but cost of living remains high

Inflation in Laos fell slightly to 4 percent in October, down from 4.5 percent in September, but the price of essential goods and services continues to rise, adding pressure on households already coping with high living costs.
According to the Lao Statistics Bureau, the October figure reflects a gradual slowdown in inflation, which stood at more than 15 percent at the start of the year.
Although this shows an improving trend, the cost of many essential items remains high, especially for housing, utilities, health, and education.
The most notable increase was observed in the goods and services category, which rose sharply by 24.4 percent compared to the same month last year. This was mainly due to the fluctuating price of high-value items such as processed gold, which rose and fell rapidly within the same month.
In addition, the price of basic services continued to climb. The cost of housing, water, electricity, and cooking fuel increased by 16.7 percent over the past year, while health-related expenses went up by 12.9 percent and education by 11.5 percent.
Although the inflation rate is gradually falling, the price of goods and services remains high compared to the average wages earned.
Employers in the private sector, including those in production, business, and service units, as well as household sectors, are required to pay a minimum monthly wage of 2.5 million kip (about US$115), effective from October 1, 2024.
In practice, salaries in the private sector currently start at about 3.5 million kip, rising to 4.5 million kip per month, but which is still low compared to the cost of living.
Month-on-month data show that consumer prices rose by another 1 percent from September to October, confirming that inflationary pressures remain persistent despite the slower annual growth rate.
Education saw the highest monthly increase at 2.5 percent, driven by a 4.5 percent rise in the price of textbooks, with school maintenance fees rising by 4 percent.
The cost of utilities also rose, with the cost of tap water rising by 7.3 percent and electricity by 1.7 percent within a single month.
Meanwhile, the cost of food purchased at restaurants also increased, rising by 1.2 percent, while the price of clothing rose by 1.4 percent.
The Asian Development Bank projects that Laos’ inflation rate will average 9.5 percent in 2025 and decline further to 8.5 percent in 2026. This is a significant improvement compared to previous years, when the inflation rate stood at 31.2 percent in 2023 and 23.3 percent in 2024.

By Phonepaseuth Volakhoun
(Latest Update October 30, 2025)