Latvian inflation moderates in July

Latvian inflation moderates in July
By bne IntelliNews August 9, 2018

Latvia’s consumer price index (CPI) grew 2.6% y/y in July, data released by the country’s Central Statistical Bureau (CSB) showed on August 8.

The reading means price growth slowed down compared to the 2.6% y/y growth rate recorded in June. Inflation thus continues to be under moderate demand-led pressure from the tightened labour market that is pushing up wages. The return of EU-funded investment is another driver of price growth.

Inflation has now grown in y/y terms for 23 months straight. That is in line with forecasts for a pick-up in CPI in 2017 and 2018 after the index barely moved in 2016. CPI growth is expected at 2.6% in 2018, the European Commission claims in its forecast. 

All but two segments recorded annual price growth in July. Price growth in the transport segment was the main driver behind the headline figure, growing 8.3% y/y. 

Price growth in housing, as well as in the alcohol and tobacco, miscellaneous, restaurant and hotels, and health segments, also contributed. Food prices dropped 0.9% y/y. The only other segment with deflation was furnishings, in which prices dropped 0.4% y/y.

In monthly terms, prices fell 0.8% in July, compared to a growth of 0.6% m/m in the preceding month.