Two World Bank policy notes have been released examining the impact of economic challenges on food prices and child nutrition in the Lao People's Democratic Republic (Lao PDR). The documents highlight a significant increase in food price inflation since mid-2022, which has surpassed both global and regional trends.
The first policy note, "Food inflation in the Lao PDR: Trends, Drivers and Impacts," identifies several factors contributing to this inflation. It reports that exchange rate depreciation has accelerated food prices more rapidly than core inflation. Notably, rice shows greater volatility compared to other food items. Food inflation is particularly pronounced in the northern regions of Laos, where staple foods are scarce and there is a heavy reliance on imports. Additionally, while rice prices are influenced by regional and global markets, domestic factors mainly affect pork and chicken prices.
There are significant disparities in how international markets influence different provinces. For instance, Savannakhet and Bokeo experience more substantial external market impacts than Sekong and Khammuan, where rice production is primarily for subsistence. Market integration limitations lead to varying food prices across provinces. The report warns that low-income urban households face a high risk of poverty due to rising inflation.
The note suggests shifting from short-term responses to a comprehensive strategy aimed at stabilizing prices, mitigating the effects of food inflation on vulnerable groups, and leveraging higher agricultural prices.
The second policy note focuses on "Determinants of Child Malnutrition in the Lao PDR," addressing persistent issues with child malnutrition, especially stunting. This problem has seen little progress amid the COVID-19 pandemic and subsequent economic struggles.
Findings indicate that children from poor households or ethnic communities or those living in northern provinces are more prone to malnutrition. Stunting prevalence varies among ethnic groups due to factors such as household wealth, sanitation quality, access to skilled birth attendants, and family size.
Recommendations include expanding multisectoral nutrition approaches targeting critical determinants of malnutrition. Restoring macroeconomic stability is emphasized as essential for curbing inflation and enabling strategic health investments. The notes also suggest scaling up conditional cash transfers linked to crucial nutritional factors and increasing diverse food production while educating caregivers about nutrition. Strengthening infrastructure for water supply, sanitation services, and institutional capacity is also recommended.