Flash comment: Latvia - CPI Mar 2019
Annual inflation stood at 2.8% in March

In March headline inflation rose by 1.1% over the month, marking a relatively sharp increase in prices compared to March in previous years. Despite that annual inflation slightly eased in March to 2.8%. 

Both external and internal factors determined price growth on monthly basis in March. Clothing and footwear were the main driving factor behind higher prices as new collections entered shops. Seasonality is very evident in the prices of clothing and footwear with prices usually declining in the beginning of a year and in the middle of it when sales hit while increasing around March and September when discount periods end. Food price growth was rather rapid this year driven by higher fruit and dairy prices. The annual alcohol excise duty hike raised the general price level as well. Additionally, fuel price increased after four months of decline previously on the back of gradually increasing Brent oil price over the past couple of months. Brent price has recently surpassed 70 dollars per barrel, reaching a similar level as a year ago. Declining supply due to OPEC cuts and lower production in Venezuela and Iran outweighs a weaker global demand for oil. 

The main driver of annual inflation continued to be housing goods and services followed by food, alcohol and tobacco, and service prices, especially leisure, restaurant and accommodation. We expect that annual average inflation will be around 2.5% with the above-mentioned categories remaining the dominant annual inflation drivers.

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

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