Consumer price level in February unchanged

In February, consumer prices remained unchanged, with the annual inflation reaching only 0.5%. Under the impact of oil prices, the price of fuel went up slightly month-on-month. Meanwhile the price of natural gas for industrial consumers has continued to drop as predicted by a/s "Latvijas Gāze" (as early as February, although initially the next reduction was expected in March) and had a favourable influence on the price of thermal energy. In February, the impact of the monthly seasonal factors was mutually excluding: the sales of winter season clothing and footwear continued (price drops exceeded that of February 2013), but the prices of seasonal tourist services rose. Thus the average level of consumer prices did not change month-on-month.

The impact of external factors on the price level in February was mostly directed upward: the average level of oil prices was slightly higher month-on-month; the prices of food also grew worldwide in all groups, except meat products. The world prices of grain products were influenced both by supply-related worries (e.g., the harvest in the USA), and rising demand (for biofuel and cattle-feed production). In Latvia, however, the overall prices of unprocessed foodstuffs dropped slightly (only the prices of eggs and potatoes went up). In the processed foodstuffs groups it was mostly the prices of dairy and grain products that grew while they dropped for fish and meat products as well as sugar.

The annual inflation level for the next few months is projected as positive, but it could be rather lower than expected because the liberalization of the electric power market could be partially or fully postponed to January 2015.

Since the electric power liberalization issue that seemed to have been solved is still returning to the agenda, producers of thermal energy who produce it through the cogeneration process have not submitted their plans for thermal energy price changes (because of the tax on subsidized energy) to the Public Utilities Commission yet.  Greater clarity regarding this issue could arrive after the Saeima meeting on 13 March when the bill on amendments in the Electric Power Law, which the Agrarian, Environmental, and Regional Policy Committee has recommended to be urgently railroaded through the parliament.