The drop in producers’ prices in November benefited from producing for the external market

In November 2012 producers prices dropped somewhat (0.2%) in Latvia as a result of producing for the external market. The 3.2% year-on-year rise in producers prices was maintained by producing for the domestic market.

Month-on-month, in a breakdown by branch producer prices dropped most rapidly in branches involved in supplying energy and waste management, and the changes in total prices and prices of products sold in the domestic market invite the conclusion that this has happened mostly on account of the external market.  However, in line with the drop in 9-month price of mazout the price of natural gas will also drop slightly over the next few months, which will have a positive effect on thermal energy price changes (the resources will cost less for producers) in the domestic market. Thus, with the global energy resource prices remaining at least at the current level or continuing to drop a little, producer prices in the production of energy will have a beneficial effect on the consumer price level.  

In manufacturing overall, price dynamics is more positive for exported products and that was mostly determined by the bigger branch (manufacturing of wood pulp and its products) and a smaller, yet competitively increasingly more important branch, i.e. printing and publishing. Its export volumes and investments are continuing to grow, yet the very variable assortment by month still determines great price fluctuations month-on-month, therefore the 5% drop in contrast to the 9.3% rise in the previous month cannot be considered a trend..

In one of the largest branches of manufacturing, foodstuffs production, the monthly rise in producer prices in November was sustained at +1%, with the lagging impact of global price rises reflected gradually; and it was similar both for products sold domestically and those sold in external markets. The data published by the Agriculture Market Promotion Center indicate that the prices of grain and dairy producer prices could remain high in December and maintain at least the current consumer price level in this group of goods unless some special sales take place. Food prices on the side of producer prices could have a positive effect on the first estimates of harvest in the regions where the first quarter is the active season.

In most other branches of manufacturing, the prices of products sold domestically rose at a slower rate or dropped more rapidly than those of exported products, at the same time alleviating the possible pressure on inflation.