Flash comment: Latvia - August 8, 2019, CPI
Annual inflation in July at 2.9%

Annual inflation was 2.9% in July that is below its 7 months average in 2019. Inflation of both goods and services moderated to 2.9% and 2.8% respectively. Prices of services experienced the smallest annual increase in 2019. The main drivers of annual inflation were food, alcoholic beverages and tobacco, as well as rising prices of housing goods and services. Fuel prices decreased slightly due to decline of global oil prices.  

Such factors as previous poor grain harvest and the spread of swine fever play a crucial role. As a result, prices of flour and other cereals, and pork are rising sharply. Vegetable prices are increasing due to the tax cut last year – after the drop in 2018, they are climbing now. 

Monthly inflation in July, compared to June, was -0.9%. July is known as harvest and discount time. Prices of fresh vegetables and potatoes decreased due to a new harvest. Clothing and footwear were influenced by seasonal discounts. The housing costs also dropped due to lower gas tariffs. 

In the first 7 months of this year, average annual inflation was slightly above 3%. If rely on the potential reducing factors in the coming months, this year's average annual inflation could be close to, but slightly below 3%.

 For more information please contact Ms. Laimdota Komare, +371 67444213, laimdota.komare@swedbank.lv 

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