Activation of inflation not expected in nearest time in Latvia – banking analysts

  • 2019-03-09
  • LETA/TBT Staff

RIGA – Activation of inflation is not expected in Latvia in the nearest time, said Latvian banking analysts, commenting on the consumer price changes in February.

Swedbank economist Linda Vildava told LETA that the annual inflation in Latvia currently meet the expected consumer price dynamics – near 3 percent in the first months of this year with a downward trend from the middle of the year. Swedbank’s forecast for annual inflation is 2.5 percent.

SEB Banka macroeconomic expert Dainis Gaspuitis told LETA that the current inflation factors suggest that no negative trends that would activate inflation are not observed.

Slowdown of global growth means that the external pressure will remain weak and price hike will remain moderate. As the pressure of wages in the market will persist, services might become more expensive.

He said that the annual average inflation in Latvia is expected to be at 2.6 percent.

Citadele bank economist Martins Abolins told LETA that moderate rise of consumer prices continues in Latvia.

“At present, the steep wage growth and excise tax hike affect the consumer prices most significantly,” he said.

He said that, considering the comparatively low unemployment level and reduction of the number of working population, there is ni reason to think that in the nearest years the wage rise in Latvia would considerably decline. Therefore, service price may grow gradually that will further determine inflation trends.

Abolins expects that the average annual inflation in Latvia could be at 2.5-2.6 percent.

In February 2018, Latvian consumer prices moved up 0.1 percent from January, while the annual inflation rate (February 2019 against February 2018) was 2.9 percent, the Central Statistical Bureau (CSB) reported today. During the last 12 months, consumer prices rose 2.7 percent against the previous 12-month period.