Flash comment: Latvia - September 8, 2016
Consumer prices in August enter the twilight zone

Consumer prices decreased by 0.7% in August compared to July, but remained unchanged compared to August last year. After a small increase in annual inflation in July (0.1% yoy), consumer prices enter the twilight zone in August with 0% annual inflation.

In monthly terms, seasonally lower vegetable and fruit as well as clothing and footwear prices contributed to the decline. Fuel prices also hindered price growth despite a slight increase in oil price in August. Recreation services positively contributed to price growth. In annual terms, goods prices declined by 1.2% still because of cheaper commodity prices. However, service price growth accelerated to 3% due to robust consumption and growing wages.

Outlook

As commodity prices continue to recover, we expect that goods prices will slowly grow and add to positive annual inflation. However, for 2016 in total we forecast average annual inflation to grow by 0% due to deflation in the first half of the year.


For more information please contact Ms. Linda Vildava, +371 67444213, linda.vildava@swedbank.lv 

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