Latvian deflation continues to accelerate in April

Latvian deflation continues to accelerate in April
By bne IntelliNews May 10, 2016

Latvia's consumer price index (CPI) fell 0.8% y/y in April, data released by the Central Statistical Bureau (CSB) showed on May 10.

The reading shows deflation accelerating further after the March reading of -0.6%, and extends the trend for falling prices to four straight months. In monthly terms, prices grew 0.4% in April, slower than the 0.7% expansion in March.

The fall in prices in March was driven by a drop of 5.5% in the transport sector. A contraction of 4.5% in the housing segment also had a major impact, the CSB noted.

Prices rose the most in the alcohol and tobacco segment, where the growth came in at 4.2%. A 2.5% expansion of prices in the health sector also helped limit the damage, while food prices inched up 0.1%.

The April reading continues to cloud the outlook for inflation, which has shown an erratic trend through 2015. The European Commission forecasts Latvian CPI will only expand at a rate of 0.2% in 2016, as "low energy prices are fully offsetting the counteracting effects [of rising incomes]."