Analytics, Financial Services, Inflation, Latvia

Zoja Razmusa. BC.

Even though the overall inflation pace decreased in January-June, robust internal demand is beginning to have an increasingly bigger effect also on inflation, said Razmusa. "We expect that core inflation, or inflation that excludes food and energy prices, this year will be higher than in 2017. Core inflation may also remain high in 2019 due to the increasing labor costs and the indirect effect of higher oil prices."

At the same time, there is no reason to worry as the current inflation, close to 3 percent, poses no threat to Latvia and rather demonstrates healthy economic growth and convergence as the gap between the salaries in Latvia and the wealthy Western European countries is growing smaller, added Razmusa.

As reported, consumer prices in Latvia in August decreased 0.1% from July, while year-on-year inflation amounted to 2.8% in August.