According to data from the Central Statistical Bureau of Latvia, consumer price level in August, when compared with July, declined by 0.2%. Prices for goods declined by 0.6% and prices for services increased by 0.6%. The price decline in August was associated with seasonal factors, reports Economy Ministry.
Still, the price decline in August was the slowest since 2007, which was affected by the unexpectedly high price increase for clothes.
The largest effect on price decline in August was caused by food. Prices on food products declined by 1.5%, which was caused by a general price decline of 0.4%. The biggest influence was caused by the price decline for vegetables and price increase on dairy products and butter.
It is mentioned in Economy Ministry’s report that global food prices declined by 1.3% in August, which was caused by price decline for cereals, meat and sugar. The most rapid price decline was noted in relation to wheat harvest increase in the Black Sea region. Prices grew most rapidly for dairy products, which was caused by increased prices for butter and whole milk powder, which had been continuing for the past several months because of high demand for milk fats in Europe and North America. Although dairy product prices have grown by 42% in the past year, they remain 20% below the maximum recorded in February 2014.
After a rapid decline in July, prices of clothes increased in August. This was caused by an unusually cool summer and sales that ended sooner than usual. Prices of clothes grew by 4.2% in August.
The influence of price rise for services also had major influence in August. Prices grew by an average of 0.6%, increasing the general consumer price rise by 0.2%. A rapid increase was noted for complex leisure services, insurance and passenger air transport services, the ministry reports.
Fuel price in Latvia grew by 0.3% in August, which did not affect the general price level. Oil prices grew by an average of 7% around the world in August. Prices remained at $52/barrel in August.
Price fluctuations for goods and services did not affect the general price level in August.
Compared with August 2016, consumer prices grew by 3.1% in August. Average inflation was 2.5%.
It is expected the average inflation will be significantly higher than in 2016 and may reach 3%. It is affected by global oil and food price fluctuations, as well as growing economic activity and wage rise, Economy Ministry representatives report. (BNN/Business World Magazine)