Deflation is still here
- The average price level fell by 0.7% over a year in October.
- Goods’ prices decreased by 1.6%, but prices of services grew by 1.5%.
The main inflation limiting factors were transport related costs (due to low fuel prices), and housing related costs, especially heating. In October, fuel prices decreased on average by 2.6% over the month and by 14% over a year. As world oil prices have not reached the previous year’s level for the 9th month in a row, and coronavirus continues to spread in the world, it is likely that fuel price in Latvia will remain below previous’ year level for some time. A decrease in prices of housing related costs was mainly due to the fact that several heating service providers around Latvia reduced heating tariffs.
On November 9 the state of emergency was declared in Latvia that will have an impact on inflation in near future. As the restrictions imposed during the state of emergency mainly affect the services sector, the price growth of services will likely ease. In November, we may not see this in the statistics yet, as the services will be limited. Therefore, real changes will be reflected in the statistics a bit later.
We reduced the inflation forecast to 0.4% this year. But in 2021 inflation may not exceed 1.5%.
For more information please contact Ms. Laimdota Komare, +371 67444213, firstname.lastname@example.org
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