VIENTIANE, Jan. 31 (Xinhua) -- The inflation rate in Laos jumped to 2.49 percent in December 2016, which is considered to be the highest rate in two years, according to the National Economic Research Institute of Laos on Tuesday.
A senior economist at the National Economic Research Institute Leeber Leebouapao attributed the rise in inflation to rising oil prices on the world market.
"Rising fuel prices have resulted in increasing production costs for farmers and producers, which has helped to drive the inflation rate upwards," he was quoted by Lao state-run Vientiane Times on Tuesday.
Leeber said inflation was also triggered by the 10 percent Value Added Tax (VAT) imposed on people bringing goods into Laos across the Lao-Thai Friendship Bridge linking Lao capital Vientiane to Thailand's Nong Khai province.
Previously traders brought food supplies into Laos without paying tax and were able to sell the goods at relatively low prices. But now that they have to pay VAT, they are selling their goods for a correspondingly higher price in Laos.
The 10 percent VAT came into force in November 2016 and so far this year over 98 million Lao kip (nearly 12,000 U.S. dollars) has been raised from this source.
In Laos, the inflation rate is mainly driven by the food and transport categories, Leeber said.
According to the Bank of Laos, in 2015, the average inflation rate was recorded at 1.28 percent, then rising to 1.76 percent in 2016.
Lao government's established policy is to keep the inflation rate lower than the economic growth rate, which stood at 6.9 percent last year. To keep inflation low, the government maintains tight control over currency exchange rates to create confidence in the business sector, thereby stabilising product prices and boosting the economy.