VIENTIANE — Lao PDR’s annual average inflation rate settled at 7.7% in 2025, marking a significant decline from the 23.1% recorded in 2024 .
The average rate for the first half of 2025 stood at 10.9%, with a continued downward trend observed throughout the latter half of the year. According to data from the Lao Statistics Office.
The Asian Development Bank (ADB) projects that inflation will further moderate to 10.4% in 2026. This outlook is supported by the Lao government’s commitment to maintaining the policy interest rate at 5.0% per annum to ensure economic stability.
Key Drivers of Deceleration
The cooling of inflationary pressure is primarily attributed to the implementation of more stringent monetary and fiscal policies, alongside intensified measures to stabilize the Lao Kip (LAK) exchange rate.
Furthermore, the nation’s international reserves saw an uptick, reaching US$2.6 billion by June 2025. This level is sufficient to cover 3.1 months of imports, providing a critical buffer for the balance of payments.
Enhanced tax collection and robust export performance have enabled the government to maintain a balanced budget and mitigate the impacts of public debt. However, despite the overall decline in inflation, certain sectors continue to face high price levels,
Specifically : Housing and Utilities: +23% ; Medical Care and Pharmaceuticals: +20.9% ; Education: +17.5% ; The government continues to monitor these essential sectors closely to alleviate the cost-of-living burden on its citizens.