Annual inflation 2% in Latvia in January

The latest data released February 12 by the Central Statistical Bureau (CSB) show that in January 2018, compared to January 2017 the average level of consumer prices in Latvia rose by 2.0 %.

Prices of goods grew by 1.5 % and prices of services by 3.3 %.

"Compared to January 2017, in January 2018 the average level of consumer prices was mainly influenced by the rise in prices of goods and services related to housing, food and non-alcoholic beverages, prices in miscellaneous goods and services group, prices of goods and services related to transport as well as health care," said the CSB.

In January 2018, compared to December 2017, the average level of consumer prices did not change. Prices of goods fell by 0.1 %, while prices of services rose by 0.2 % with a reduction of value added tax (VAT) on vegetables, fruit and berries and an increase in excise duty on fuel influencing on the price changes.

Commenting on the data, Swedbank said: "Faster world GDP and demand growth this year could warrant further global food price growth. In the wake of expectations of a more balanced oil market, the oil price is expected to be higher than a year ago. Moreover, service prices will be in the spotlight this year. As the experience from our neighbors shows, service prices could grow faster due to a steep minimum wage hike (by 13% from EUR 380 to 430) and further labor market tightening. Also, changes in taxes will have their effect on inflation. Excise duty hikes will exhibit an upward pressure on price growth while VAT reduction for Latvian vegetables and fruits will slightly calm inflation. The forecast for average annual inflation in 2018 is 3.7%."

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