Latvian inflation up on year, down on month

The latest data released January 10 by the Central Statistical Bureau (CSB) show that in December 2019, compared to December 2018, the average level of consumer prices rose by 2.3 %.

Prices of goods increased by 2.1 % and prices of services by 2.6 %.

Compared to November 2019, in December 2019 the average consumer price level dropped by 0.2 %.

Prices of goods fell by 0.5 %, while prices of services rose by 0.3 %. Drop in prices of clothing and footwear, prices in miscellaneous goods and services group, prices of furnishings, alcoholic beverages and tobacco products, goods and services related to housing, as well as rise in prices of goods and services related to transport, food and non-alcoholic beverages had the most significant effect on the price changes.

Average inflation over the whole year was 2.8%, according to the Finance Ministry.

"Moderate inflation and still strong wage growth mean that the purchasing power of the population is growing fast enough, but this year the rate of inflation in Latvia will increase slightly again. This is mainly due to the increase in consumption taxes as well as other changes in legislation," said Citadele bank economist Mārtiņš Āboliņš in response to the data.

"As a result of tax increases and rising global oil prices due to geopolitical tensions, a slight acceleration of inflation is expected again in Latvia in January... According to my forecast, consumer prices in Latvia will grow by 2.5% in 2019, but the price increase will largely depend on external factors, which are currently very difficult to predict," said Āboliņš.

 

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