Latvia finally breaks 2016 deflation streak

Latvia finally breaks 2016 deflation streak
By bne IntelliNews August 8, 2016

Latvia's consumer price index (CPI) inched up 0.1% y/y in July, data released by the Central Statistical Bureau (CSB) on August 8 showed.

The reading is the first inflation in annual terms recorded this year. A rise of 0.3% in December - itself the first indicator of price rises in four months - preceded six straight months of falls in the index. In monthly terms, however, prices fell 0.3% in July, compared to no change in June.

Gains in prices in all sectors except for transport and housing drove Latvia's CPI just above the threshold on an annual basis. Prices in transport fell 4.7% on the year, while housing became 2.2% less expensive. Those falls were offset by prices in the alcohol and tobacco segment, which grew 3.9%, while food prices sped to a gain of 0.9%, much faster than the 0.2% seen in June.

Still, with deflation barely left behind, there is little in hint that a stronger inflation trend could develop in 2016. The European Commission forecast in the spring that Latvia's CPI will rise 0.2% through the full year.

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