Analytics, Banks, Foodstuff, Inflation, Statistics

Swedbank economist in Latvia Linda Vildava told that inflation in August increased slightly from July, reaching 2.8%. This was mostly due to higher prices of alcoholic beverages and fruit while, on the other hand, prices for fuel, clothing and services were growing slower and had a lowering effect on the inflation rate.

"Annual inflation in August was a little faster, mostly due to higher prices of alcoholic beverages and fruit. Prices for alcoholic beverages increased 6% year on year. Undeniably, higher excise tax has had an effect on alcoholic beverages' prices," said Vildava. On the other hand, fruit prices, after falling for several months, rose approximately 4% in August as compared to August 2017, she added.

Prices of fuel were growing slower as a result of developments on the global market of oil products, while clothing prices decreased as a result of seasonal sales. Prices of services were growing by 3.4% on the average each month this year, but the increase in August was 2.8%, said Vildava.

According to Vildava, inflation will be growing slightly faster in the coming months, exceeding 2.8%. "Regardless, we expect that the average annual inflation this year will be lower than last year, that is, 2.6%."

SEB Banka macroeconomic expert Dainis Gaspuitis also told that inflation in the next six months would be under 3%.

"Prices of services will have the biggest impact on inflation, and energy prices also have the potential to prompt inflation, but that will most probably occur next year. The average oil price projection for this year is USD 73 per barrel, while next year it is projected at USD 85 per barrel. The dry weather across the world means that grain prices will likely increase, which in turn will affect other product groups such as meat and meat products," said Gaspuitis.

He added that inflation in Latvia this year was projected at 2.5% and in 2019 - 2.8%. "Therefore the overall inflation pace will not affect purchasing capacity," said Gaspuitis.

As reported, in August 2018 Latvian consumer prices moved down 0.1% from July, while the annual inflation rate (August 2018 against August 2017) was 2.8%, the Central Statistical Bureau of Latvia announced yesterday.