Flash comment: Latvia - December 10, 2018 CPI
Annual inflation at 3% in November

Annual inflation rate eased slightly in November to 3%, growing above 3% in the two preceding months. Prices of both goods and services also grew by 3% on annual basis. 

The main drivers of annual price growth in November were transport, housing and alcohol and tobacco. Together these categories accounted for 2 percentage points of price growth. The two former are largely affected by higher energy prices than a year ago. Despite the recent oil price slump, Brent crude (in euros) was still 8.5% higher than in November 2017. Meanwhile, the latter mainly reflected alcohol and tobacco excise duty hikes earlier this year. 

At the same time, slower vegetable and fuel price growth determined the easing of annual inflation rate in November, compared to October when prices grew by 3.2%. Vegetable prices retreated from rapid growth rates and grew 2.8% annually in November (11.1% in October) while fuel prices moderated from 17.6% YoY in October to 15.7% YoY in November. 

Outlook 

The average annual inflation in 11 months of 2018 has been 2.5% which is largely in line with our forecast for this year (2.6%). Next year we expect a similar average annual inflation rate – a moderate 2.7%.

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

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