Latvia’s Producer’s Price Index was 1.2% y/y and 0.2% m/m in August, data by Central Statistical Bureau shows. Producer prices growth for the secnd month in a row decelerated as compared to 2.1%-2.2% y/y seen in March-June.

In 2012, PPI increased by 3.7% vs. 7.7% increase of producer prices in 2011. Out of that, in 2012 prices of products sold domestically increased by 5.2% and of exported goods by 1.8%.

Manufacturing prices’ growth that had 72.4% weight in August’s PPI was 1.9% y/y, prices of the utilities with 21.4% weight slipped by 0.3%, and mining prices with 2.1% weight gained 3.6% y/y. Producer prices growth rates remained stable in all segments, with a slight reduction in manufacturing and utilities. The increase of production prices of food products also remained stable at 3% growth y/y.

Prices of domestically sold produce went up by 0.4% y/y and prices of exported products went up by 2% y/y in August.

The Bank of Latvia economist, Olegs Krasnoperovs on makroekonoimika.lv commented that producer prices are not putting any pressure on consumer prices. Global, European, and domestic trends do not indicate any threat to price stability in the coming months.

The CB sees consumer price inflation averaging to 0.7% y/y this year vs. previous forecast of 1% (already cut once from initial 2% expectation). Cutting inflation forecast to 0.7% y/y in 2013 was attributed to low inflationary expectations for H2/13. Wage growth is in line with the productivity developments, the central bank believes. Moderate development in crediting does not indicate consumption boom that could endanger price stability.