The Bank of Latvia has upgraded the average inflation outlook for 2022 from the previous 6.1% to 9.5%. For next year the inflation outlook is upgraded from 2.9% to 3.7%, said Bank of Latvia Monetary Policy Office head Uldis Rutkaste at a discussion organised by the central bank on Wednesday, 30 March.
Upgrade of the outlook was done in response to the increase of global energy resources and food prices, which was caused by the start of the armed conflict in Ukraine, said Rutkaste.
At the same time, the average inflation outlook for 2024 remains at 2.1%. This reflects the drop of energy prices, but still above the highest levels of previous years.
Rutkaste explained the war in Ukraine increases prices and has a negative effect on the purchasing power of Latvian residents.
Inflation is expected higher for nearly all products, especially fuel, gas, heating, electricity, and food, which means residents are able to purchase less for the same amount of money, mentioned Rutkaste.
He also said state aid will help deal with price rise. With prices continuing to grow, focused state aid for groups of poor residents will remain topical.
The Bank of Latvia expects base inflation, aside from food and energy prices, will reach 4.1% in 2022 instead of the previously predicted 3.1%. In 2023 it is expected to be 3.5% instead of 2.6%, in 2024 inflation is expected at 3.7% instead of 2.3%.
Bank of Latvia upgrades inflation outlook to 9.5% for 2022
