Annual inflation below 1 percent in August

In August, consumer prices in Latvia decreased by 0.6% compared to July and annual inflation was at 0.8%, official data released Monday by the Central Statistics Bureau (CSB) said.

"Compared to August 2013, the average consumer price level in August 2014, rose by 0.8%. Prices of goods decreased by 0.1%, while prices of services grew by 3.2%," said the CSB.

"Compared to the previous 12 months, the average consumer price level over the last 12 months  increased by 0.3%," it added.

"The greatest pressure on the average level of consumer prices in August 2014, as compared to August 2013, was put by the increase in prices of services related to housing, hotel and restaurant services, alcoholic beverages and tobacco, recreational and cultural goods and activities, as well as by the price drop of transport goods and services."

In a commentary on the data, Swedbank said: "One of the reasons for very weak inflation is commodity price developments globally. Since price data are collected in the middle of month, it cannot be seen in August CPI data; however, prices of fruits and vegetables, as well as dairy products have already been reduced somewhat in major retailer chains.

"At the same time growing labour costs are gradually causing prices of services to go up. In August, prices of goods were by 0.1% lower than a year ago, while prices of services were 3.2% higher. Another factor that will push imported prices upwards is gradual weakening of the euro (directly influencing, e.g., fuel and gas prices). 

"We forecast that average consumer price growth will be at 0.8% this year," Swedbank concluded.

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