Analytics, Inflation, Latvia, Markets and Companies

Compared to January 2017, in January 2018 the average level of consumer prices was mainly influenced by the rise in prices of goods and services related to housing, food and non-alcoholic beverages, prices in miscellaneous goods and services group, prices of goods and services related to transport as well as health care.

Over the year, the average level of food and non-alcoholic beverage prices increased by 1.9%. Rise was recorded in prices of butter (of 31.0%), sour cream (16.3%), milk (9.6%), kefir (14.1%), yoghurt (4.9%), and cheese and curd (1.8%). Increase was registered also in prices of eggs (19.9%), pork (7.2%), dried, salted or smoked meat (3.1%), meat preparations (5.9%), poultry (1.8%), bakery products (4.3%), and potatoes (10.1%). Reduction, in turn, was observed in prices of fresh vegetables (of 11.6%), sugar (33.5%) and coffee (2.7%).

Within the group of clothing and footwear, the average level of prices fell by 0.9%, which was mainly influenced by the decline in footwear prices of 3.7%. Prices of footwear for women declined by 4.9% and prices of footwear for children by 6.2%.

Over the year, prices of furnishings diminished by 1.3%. Reduction was recorded also in prices of household cleaning and maintenance products (of 6.7%) and dishes (1.5%).

Prices of goods and services related to housing grew by 3.2%. Increase was recorded in prices of solid fuels, heat energy, maintenance charges in multi-occupied buildings, prices of refuse collection, services for the maintenance and repair of the dwelling, and natural gas.

Within the health care group, the average level of prices went up by 4.0%, which was mainly influenced by the rise in prices of dental services (10.4%), pharmaceutical products (3.2%), and prices in medical specialist practice (2.4%).

Prices of goods and services related to transport increased by 1.9%, which was affected by 4.3% rise in prices of fuels for transport – 3.6% in diesel price, 5.8% in petrol price and 1.0% in auto gas price. Growth was also recorded in prices of maintenance and repair of personal transport equipment. Prices of passenger transport by air, in turn, fell.

Within the group of miscellaneous goods and services, the average level of prices grew by 7.3%, which was mostly due to the rise in prices of motor vehicle insurance.  Increase was also recorded in prices of hairdressing salons and personal grooming establishment services.

Among other commodity groups, the most significant growth was recorded in prices of tobacco products, catering services, telecommunication services and television subscription fee. In its turn, decline was registered in prices of beer and spirits.

Price changes and weights by commodity group (as per cent)

In January, both rise in prices of separate goods and services and seasonal sales and discounts were observed.

Reduction of value added tax (VAT) on vegetables, fruit and berries characteristic in Latvia and increase in excise duty on fuel both had influence on the price changes. As a result, in January 2018, compared to December 2017, the average level of consumer prices did not change. Prices of goods fell by 0.1%, while prices of services rose by 0.2%.

In January, the greatest pressure on the consumer price changes was put by the growth in prices of goods and services related to housing, prices in miscellaneous goods and services group, prices of alcoholic beverages and tobacco products, furnishings, goods and services related to transport, however the rise was compensated by the seasonal sales of clothing and footwear characteristic to January. 

Over the month, prices of food and non-alcoholic beverages dropped by 0.1%. Reduction was registered in prices of fresh vegetables (5.7%), which was because of the reduction of VAT on vegetables, fruit and berries characteristic in Latvia (from 21% to 5%). Compared to the previous month, decline was recorded in prices of cabbages (9.1%), carrots (4.3%), onions (8.0%), tomatoes (3.1%), cucumbers (8.4%), and garlic (15.3%), however in previous years the prices of these products in the respective period went up. Prices of fresh fruit diminished by 0.4%, however, knowing that in January availability of Latvian fruit in shops is limited, VAT reduction had less important influence on the fruit price changes. Reduction was observed in prices of butter (6.8%), sour cream (3.1%), and sugar (6.0%). Increase, in turn, was registered in prices of chocolate (5.9%), meat preparations (4.6%), fresh or chilled fish (8.1%), pork (1.9%), bakery products (1.4%), cheese and curd (1.2%), and coffee (1.6%).

Prices of alcoholic beverages grew by 1.6%, which was mainly influenced by rise in prices of spirits and beer. The average level of tobacco product prices went up by 0.6%.

Under the influence of seasonal discounts and sales, prices of garments diminished by 10.2% and prices of footwear by 7.9%.

Prices of goods and services related to housing grew by 1.3%. Increase was observed in maintenance charges in multi-occupied buildings, prices of solid fuels and refuse collection. Rise in prices of refuse collection was influenced by the increase in natural resources tax as of 1 January 2018. Decline, in turn, was observed in prices of natural gas.

The average level of furnishings prices went up by 2.0%. Under the influence of ending sales, increase was registered in prices of household cleaning and maintenance products, as well as non-electric kitchen utensils and articles.

Prices of goods and services related to transport increased by 0.6%, which was mostly influenced by 3.7% rise in prices of fuels for transport – 3.6% in diesel price, 3.9% in petrol price and 3.5% in auto gas price. As of 1 January 2018, the excise duty on fuel grew. Prices of maintenance and repair of personal transport equipment increased, whereas prices of passenger transport by air fell.

Within the miscellaneous goods and services group, the average level of prices rose by 2.6%, which was because of the rise in prices of articles for personal hygiene and beauty products as well as motor vehicle insurance. As of 1 January 2018, the state fee for the delivery of a pension at home increased by 37.7%.

Among other commodity groups, the most significant growth was recorded in prices of dental services, while prices of package holidays and pet food went down.

Information on consumer price index changes in February 2018 will be published on 8 March.

More detailed information on consumer price changes is available in the CSB database section Consumer Prices.

* The annual inflation reflects consumer price changes, comparing the average price level in the comparison month with the average price level in the corresponding month of the previous year.

** Weights reflect the share of expenditure on the respective commodity group in the total household consumption.