Flash comment: Latvia - October 8, 2018
Annual inflation surpasses 3% in September

Annual inflation exceeded 3% for the first time in more than a year, reaching 3.2% in September. The main contributors to the annual inflation rate in the past few months have been prices of goods. Categories with the largest contributions to the price growth have been transport and housing, which are to a large extent influenced by external factors such as energy prices. Brent crude oil price per barrel in USD this year has been on average 40% above the last year’s level which undoubtedly has been and will continuously be reflected in higher local prices. Also, due to excise duty hikes this year alcohol and tobacco prices have driven prices up. In addition, service prices, especially catering, health and insurance, have contributed to price growth. 

Meanwhile, a jump in the annual inflation rate in September, compared to 2.8% in August, was mainly determined by food price, especially vegetable, growth. Vegetable price growth in September over the month has been atypically fast. Prices grew by 13%. Most probably, the weather both this year and the last is starting to take its toll. Thus, for the first month this year vegetables have been more expensive compared to the corresponding month of the year before. Moreover, an increase in the prices of clothing and especially footwear, as the sales season wrapped up, contributed to a higher annual inflation rate in September. 

In September for the first time this year the annual inflation rate surpassed 3%. In comparison, last year the annual inflation rate was 3% or more for five months. In the coming months, we expect the annual inflation rate to hover around 3%, mostly influenced by the same factors as in the past few months. Taking into account the slow annual inflation rates in the beginning of the year, average annual inflation this year is expected to be moderate – around 2.6%.

For more information please contact Ms. Linda Vildava, +371 67444213, linda.vildava@swedbank.lv 

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