Euro changeover had minimal impact on inflation

Fears that Latvia's accession to the eurozone on January 1, 2014 would produce a spike in inflation have proven largely groundless, according to a Eurostat study published Wednesday.

"Eurostat estimates that the month-on-month rate of change of the Latvian all-items Harmonised Indices of Consumer Prices (HICP) would have likely been between 0.12 and 0.21 percentage points smaller in January 2014 had the euro changeover not taken place," the report said.

"This estimated effect on the monthly inflation rate for January 
2014 appears to be the total (one-off) euro changeover impact during and immediately after the introduction of the euro, as in other months the impacts were statistically not significant. 

"The Latvian euro changeover impact is in line with what was observed in the first-wave changeover in 2002 and that of Slovenia in 2007, Cyprus and Malta in 2008, Slovakia in 2009 and Estonia in 2011.

"Therefore, Eurostat considers that the euro changeover effects in Latvia have been noticeable but were not of a magnitude that could drive headline inflation," the study said. 

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