In March 2024 inflation will be increased slightly by the growth of excise tax rate on alcoholic beverages, tobacco products, tobacco alternatives and electronic smoking devices. Nevertheless, inflation in March and coming months will remain below 1%, according to representatives of Latvian Ministry of Finance.
After a generally rapid consumer price growth in January 2024, when prices went up by 0.8% in a single month, which is normal for the beginning of the year, the growth of consumer prices in February slowed down again. According to the latest data from the Central Statistical Bureau of Latvia (CSP), consumer prices went up by 0.1% in February, when compared to January. Annual inflation went down from 0.9% in January to 0.4% in February.
Inflation continues influencing food prices, ministry representatives say. In February 2024 food and non-alcoholic beverages prices were 1.5% higher when compared to February 2022. Food products have a strong influence on average inflation, because its proportion in the total consumer basket reaches 26.5%.
Prices of energy resources went down significantly, thereby partially contributing to the drop of production costs. Looking at food producers’ prices, the ministry concluded that since November 2023, food producers that sell their products in Latvia have reduced prices.
No data is available for February as of yet. January’s data, on the other hand, indicates that production prices of food products sold on the local market were 2% lower than a year ago. This means inflation will continue going down in retail stores in the coming months.
Consumer prices remain under influence from increasing prices of healthcare services, which have increased by 6.7% when compared to February 2023. Prices of leisure and culture services became 6.4% higher, whereas prices of catering services went up by 5.9%. Housing rent became 9.8% more expensive over the course of the year.
The ministry predicts that the growth of prices of these services will slow down slightly in the coming months. Nevertheless, prices will remain above the average inflation level, which is largely dictated by the tenses situation on the labour market and pressure from growing labour force costs.
At the same time, average inflation was affected by the drop of the prices of energy resources – heating tariffs were 19.4% lower than a year prior, for example. Prices of gas, electricity and fuel prices were 13.8%, 7.3% and 1.8% lower.
The ministry’s representatives say that in the context of the past two years of high inflation, when in some months annual inflation exceeded 20%, it is difficult to believe it is just slightly above 0%. Nevertheless, it is important to keep in mind that the published inflation data reflects the average growth of consumer prices in the country. At the same time, inflation for every individual person may be even higher or lower than the average inflation level in the country. The ministry explains that it is affected by the habits of each individual person, the consumer basket, income level, place of residents and other factors.
One other aspect that is important to keep in mind when looking at inflation is the assortment of goods and services not included in the consumer price index methodology, the ministry explains. In this case this is about dwelling costs and loan maintenance costs.
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Ministry says average inflation in March to remain below 1% in Latvia
