Analytics, Inflation, Latvia, Markets and Companies

Inflation was surprisingly low in the first two months of 2013. Favorable raw material price dynamics worldwide and low pressure from local factors were the reasons behind this. World food and oil prices in euros are predicted rather stable this year. Thus fuel, gas and central heating prices in Latvia should not experience considerable chances, food prices could increase slightly, explained Strasuna.

The low pressure of local factors on prices, can be explained by the fact that the Latvian economy is still below its potential, namely – the available capital and labor force are not put to efficient use, added the economist.

Swedbank predicts that inflation will grow to 3.5% in 2014, mostly due to an increase in global raw material prices.

The level of unemployment could drop to 10% around 2015, meaning higher pressure on costs and competitiveness. Salaries could grow steeper than productivity, predicted Strasuna.

As reported, compared to March 2012, consumer prices increased 0.2% in March 2013, according to the Central Statistical Bureau's data.

The average price level of goods increased 0.3%, of services – remained unchanged. The annual average rate of change was 1.5% in March 2013.

The greatest upward pressures on consumer prices in March 2013, compared to March 2012, were put by an increase in food commodity prices, whereas a drop in transport goods and services and communication services prices had the most significant downward impact.

In March, compared to February, the average consumer price level increased 0.5%. The average price level of goods increased 0.7%, of services – did not change.

The greatest upward pressures on the price changes in March were put by growth in clothing, footwear and food prices, while the strongest downward pressures were applied by goods and services related to transport.