Highlights:

• Food price inflation in the Lao PDR has surged since mid-2022, outpacing global and regional trends
• Domestic food prices are influenced by a combination of external and domestic factors
• The depreciation of the Lao kip has significantly contributed to recent food inflation.
• The degree and speed of international-to-local price transmission varies across provinces
• Limited domestic market integration means that changes in prices for food commodities vary across Laos
• Food inflation contributes to food insecurity and poverty, but its impacts vary across socioeconomic groups.

Policy Recommendations:

Restore macroeconomic stability: Stabilise the currency by increasing foreign currency reserves, reducing debt through renegotiations and mobilizing additional forex revenue.

Scale up targeted income support: Implement targeted measures for poor urban households impacted by food inflation, such as the Ministry of Agriculture and Forestry's Helping Hand Programme, which mitigated the impact of food inflation on nutritional outcomes

Leverage high agricultural prices to boost productivity and raise incomes for the poor, ensure access to credit and inputs, provide targeted cash and in-kind support, offer training and assistance on farming techniques and commercial practices. Increase investments in irrigation, storage facilities, and roads.

Enhance nationwide market integration and facilitating price transmission: improve agricultural market monitoring to mitigate information asymmetries, improving connective infrastructure to reduce logistical barriers