consumer's prices

The annual inflation in Latvia remained low in December at 1.6%. Month-on-month, the average consumer price level did not change.

In the direction of growth it was influenced by a rise in unprocessed foodstuff prices, as well as raised fuel prices in Latvia (despite a fall in the exchange of the US dollar and the global prices of oil products were stable).

A seasonal rise in prices is usually observed in September and this year was no exception: the average price level went up 0.4%. The annual inflation, however, dropped slightly, reaching 4.6%.

A drop in prices is traditionally observed in August and this year as well the average price level dropped by 0.3%, primarily as a result of seasonal discounts. The annual inflation, on the other hand, rose from 4.3% to 4.7% on account of base effect.

Producer prices in March continued to rise as a result of rising production costs, with global raw material prices appreciating steadily. In the course of a month, the rise in raw material prices has made production more expensive in most manufacturing industries, particularly chemical industry as well as food and metal production. Albeit global price rises make production more expensive, some enterprises, e.g., food producers, benefit from the opportunity to sell their products for a higher price.

As forecast, annual inflation continued to rise also in February, reaching 4.0% and, with the price level going up 0.3% within a month, the 12-month average inflation turned positive and reached 0.2%. The rise in retail prices in February continued to reflect tax hikes in Latvia and the rises in global energy resource and food prices. Food prices continued to rise: prices were higher for vegetables and fruits as well as dairy and grain products. Influenced by the rising oil prices, fuel prices continued up but at a slower rate than at the end of last year.

The average rate of consumer prices in 2010 overall was 1.1% lower than a year ago. To a great extent, it resulted from the low domestic demand and drop in producer prices: as labour costs shrank, and productivity rose, businesses could respond to the drop in demand with lower prices.

Producer prices dropped for a second consecutive month compared to the previous month. In October the drop was accounted for by the producer prices of goods sold domestically, whereas in November it was primarily the prices of exported production, with the prices of domestically sold goods remaining rather stable, i.e., month-on-month, they rose only 0.1%. Overall, producer prices in November were 8.2% higher year-on-year.

Consumer prices continued to grow in November. As global prices continued to drive up food and fuel prices, the general consumer price level has risen by 0.2% and is 1.9% higher than a year ago. The pressure of the low domestic demand has continued to drive down the prices of services, which were 0.2% lower month-on-month and 2.6% lower year-on-year.

Comparing the consumer prices of October and September, we see a small rise (0.4%), primarily attributed to the rise in the prices of processed foods, which in turn was accounted for by the rise in global food prices. The October price rise was by and large determined by the price dynamics of grain and milk products. The 12-month inflation reached 1.0%.

The annual average inflation, after which the Maastricht criterion is calculated, in Latvia remained negative in September - i.e. deflation was at -1.8%, and deflation is likewise expected in the year as a whole.

Calculating the price changes year-on-year, inflation of 0.4% was registered after a year's pause. Over the month a 0.4% price rise was also registered while for several groups of goods and services prices continued to drop - a total of 32% of the basket of commodities.