Laos Records Inflation Drop to 4% in October 2025 Amid Persistent High Cost of Living

Inflation Eases to Single Digits in October 2025

The Lao People's Democratic Republic has reported a significant reduction in its inflation rate, which fell to 4 percent in October 2025. This marks a decrease from 4.5 percent recorded in September 2025, according to official data from the Laos Statistic Bureau. The Consumer Price Index (CPI) stood at 259.6 in October, an increase from 256.9 in September and 249.6 in October of the previous year, indicating that while the pace of price increases has slowed, overall prices remain elevated.

Persistent High Cost of Living Challenges Households

Despite the easing inflation, the high cost of living continues to be a major concern for Lao citizens. Several categories saw substantial annual price increases in October 2025:

• Housing, water, electricity, and cooking fuel recorded the highest annual increase at 16.7 percent.
• Other goods and services rose by 24.2 percent.
• Healthcare and medicine increased by 12.9 percent.
• Education costs climbed by 11.5 percent.

These figures highlight the ongoing financial strain on households, particularly for essential needs.

Economic Factors Contributing to Price Pressures

The persistent high cost of living in Laos has been influenced by several macroeconomic factors over recent years. Historically, the country has grappled with significant currency depreciation of the Lao kip and a heavy reliance on imports, which drive up the prices of goods. For instance, the annual average inflation rate was 23.1 percent in 2024, a decline from 31.23 percent in 2023, but still considerably high. The World Bank noted that macroeconomic instability, including high public debt, continues to erode purchasing power and increase business costs.

Government Measures and Societal Impact

In response to these economic challenges, the Lao government has implemented various measures aimed at stabilizing the economy and alleviating the burden on citizens. These include tightening monetary policy, controlling exchange rates, boosting domestic production, and reducing dependency on imports. Prime Minister Sonexay Siphandone has expressed a commitment to reducing inflation to single digits by the end of 2025. However, the prolonged period of high prices has significantly impacted household incomes and living standards, leading many to reduce spending on health and education, deplete savings, and seek employment opportunities abroad.