Analytics, Covid-19, Inflation, Latvia, Markets and Companies

Compared to 2015, in May 2020 consumer prices were 8.7% higher. Prices of goods increased by 6.8% and prices of services by 13.6%.

Compared to May 2019, in May 2020 the average level of consumer prices was mainly influenced by the drop in prices of goods and services related to transport, goods and services related to housing, clothing and footwear, as well as rise in prices of food and non-alcoholic beverages, restaurant and hotel services, health care, alcoholic beverages and tobacco products.

Over the year, prices within the group of food and non-alcoholic beverages increased by 2.5%. Prices of fresh fruit (up by 28.1%), mainly of apples, oranges and lemons had the most significant upward impact on the average price level within the group. Upturn was registered also in prices of dried, salted or smoked meat (of 12.5%), poultry (7.1%), pork (7.3%) and meat products (6.8%). Increase was recorded in prices of bakery products (of 3.4%), bread (1.4%), buckwheat (15.0%), breakfast cereals (10.4%), pasta products (5.9%). sweets (7.3%), ice cream (3.1%), eggs (2.0%) and chocolate (2.5%). Decline, in turn, was registered in prices of fresh vegetables (of 13.2%), potatoes (27.7%), cheese and curd (2.9%), coffee (3.0%), olive oil (14.8%), fresh or chilled fish (7.7%).

The average level of alcoholic beverage and tobacco product prices went up by 1.5%, which was mainly influenced by the increase in prices of tobacco products by 4.1% on average. Prices of beer and wine rose, but prices of spirits reduced.

The average level of clothing and footwear prices fell by 2.9%. Prices of footwear reduced on average by 6.2% and of garments – by 1.6%.

Over the year, prices of goods and services related to housing dropped on average by 1.5%. Decline was recorded in prices of natural gas, electricity, rentals for housing, solid fuels, water supply and sewage collection, while increase was registered in prices of refuse collection, heat energy, maintenance charges in multi-occupied buildings, materials for the maintenance and repairs of the dwelling, as well as services for the maintenance and repairs of the dwelling.

Within the health care group, the average level of prices rose by 2.2%, which was mainly influenced by the increase in prices of dental services, prices in general medical practice, as well as prices in medical specialist practice. Downturn was also registered in prices of pharmaceutical products.

Prices of goods and services related to transport declined by 9.6%, which was affected by the drop in prices of fuels for transport (of 24.3%), mainly diesel (of 25.0%). Prices of petrol reduced by 24.1% and of auto gas – by 19.4%. The average level of second-hand motor car prices reduced. Increase over the year was observed in prices of passenger transport by road, maintenance and repair of personal transport equipment, as well as passenger transport by train.

The average level of restaurant and hotel service prices went up by 2.6%. Price rise was mainly affected by catering services, as the average level of restaurant and café service prices increased by 3.1% and that of canteen services by 3.3%.

The most significant downturns among other commodity groups were recorded in prices of motor vehicle insurance. Upturns, in turn, were registered in prices of articles for personal hygiene and beauty products, as well as prices of telecommunication services.

Price changes by commodity group (as %)

COVID-19 influence on consumer price index in May

Data collection

The consumer price survey is conducted in Riga and ten other cities and towns from 4^th to 20^th date. Price collection is performed by trained CSB employees by visiting sampled trade and services outlets, collecting prices online, or conducting telephone interviews.

Due to the restrictions introduced due to the COVID-19, the share of prices collected remotely (using Internet resources and telephone interviews) has increased.

In May approximately 10% of prices were collected with one of the alternative price collection options (the share represents only the prices usually collected by visiting registration places).

Data quality

Consumer price index calculations each month are based on approximately 25 thousand prices. All price data collected in May, including prices collected remotely, underwent standard validation procedures. No atypical or unjustified decreases or increases that could not be explained by global and seasonal trends were observed. At the end of the data validation, there was no evidence that use of the alternative methods had affected dynamics of price changes or quality of the data. Thus, all price data collected within the survey meet methodology and quality requirements.

Prices that were not available due to the COVID-19 crisis were imputed. Sub-indices quality whereof was influenced significantly are listed in the imputations section. Indices with significant number of imputations (> 50%) caused by COVID-19 and thus having lower quality in the CSB database are indicated with "u".

The share of imputations may differ notably depending on the commodity group, however the share of COVID-19-caused imputations in the total data on May accounts for 3.4%, which is 6.6% of total consumption expenditure.

Sample and weights

In line with the consumer price index calculation methodology, weight structure and sample shall be constant throughout the whole year. Therefore, irrespective of the zero activity or significant activity decline in selected sectors, no changes were made in the weights or sample.

Imputations in the calculations caused by the COVID-19 crisis

In May, in all commodity groups, except for the communications, there were prices not observed due to the COVID-19 crisis. The missing prices were imputed using one of the four methods:

1. Imputation based on available prices for the same product;
2. The last observed price was used (carry forward);
3. Imputation of the monthly price change of the corresponding month of the previous year;
4. Imputation with the annual rate of change of all reliable price indices.
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6. The first imputation method was used in cases when under the influence of COVID-19 crisis product or service was only partially available, i.e., not in all sampled trade and services outlets, but still was available in sufficient quantity to represent the general price movement.
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8. The second method was used in cases when prices of a good or service are stable, are changing rarely or mostly at the beginning of the year, are fully or partially administered, and there is a reason to believe that after lifting restrictions the good or service will be available for the same price.
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10. The third method was used for services subjected to seasonal price fluctuations.
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12. The fourth method was used in sectors characteristic with zero activity and pronounced seasonal pattern, such as passenger transport by air or sea, package holidays. Annual consumer price index calculation of all "reliable” indices is based on sub-class level. The sub-class index is considered "representative” if number of COVID-19 imputations is under 50%.
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14. In May 2020, annual consumer price index of all "reliable” indices constituted 99.3.
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16. The calculations excluded the following sub-classes (number of imputations exceeded 50%):

• Passenger transport by air (method 4),
• Passenger transport by sea (method 4),
• Recreational and sporting services – participation (method 2),
• Cinema and theatre services (method 2),
• Games of chance (method 2),
• Package holidays (method 4),
• Training courses (method 2),
• Canteen services (method 2).
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• Share of imputations made and imputation methods used by commodity group

Information on consumer price changes in June 2020 will be published on 8 July.

*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.