The main force behind inflation in Latvia remains based in three main groups – housing, food and transport, which compose 18.4% of total inflation, says SEB Bank economist Dainis Gašpuitis.
As BNN previously reported, inflation in Latvia was 22.2% in September 2022. Over the course of the month inflation increased by 1.6%.
According to Gašpuitis, it is becoming harder and harder to limit the inflation and its growth rate observed in other groups.
«The main trend will be dictated by the future dynamic of energy prices, especially gas. When it comes to gas, however, there are positive signals. We will be able to estimate the full force by the end of the year or start of next year. Currently the gas price decline offers cautious optimism,» said the economist.
If forecasts of a warm winter come true, prices could drop even more rapidly, rapidly reducing inflation in the process, said Gašpuitis, adding that, despite that,
inflation will continue increasing on levels in the coming months.
«The increase observed in many groups, including tariffs, will continue growing. This applies to food products and services.»
Gašpuitis stresses that the start of next year will bring uncertainty due to the embargo on Russian fuel and petrol products. «This is why the peak of inflation is still ahead and uncertainty is so high that we will be able to assess longer-term inflation perspectives no sooner than the start of next year.»
This may mean Latvia can expect increased and lasting inflation and unexpectedly sharp short-term periods of deflation, says the economist.
Also read: September’s expected inflation in Latvia at 22.2%