Bank analysts predict annual inflation will be at around 7.8% in January

RIGA - Consumer prices in Latvia in January this year, compared to the previous month, could have increased by 0.3-0.4 percent, thus annual inflation in January 2021 could be at around 7.8-7.9 percent, bank analysts told LETA.

Swedbank economic expert Laura Orleane predicted to LETA that in January 2022, compared to December, consumer prices could have risen by 0.4 percent, with inflation reaching 7.9 percent during the year.

She noted that the price increase recorded last month will be slightly lower than previously expected, taking into account the government's support measures to mitigate the rise in energy prices. "Inflation can be expected to have reached its peak or is very close to it," Orleane said.

The Swedbank economist said that utility costs remained the main driver of inflation during the year as a result of the European energy crisis.

"Geopolitical tensions in the Middle East, the Russia-Ukraine conflict and growing demand have contributed to the rise in world oil prices. It has also contributed to rising fuel prices in Latvia, which was likely to be the second most important driver of inflation in January.

SEB Banka's macroeconomic expert Dainis Gaspuitis, for his part, projected to LETA that in January consumer prices could have risen by 0.3 percent month-on-month, bringing annual inflation to 7.8 percent.

"In January, the price increase continued," Gaspuitis said.

According to him, the rise in prices for food and utilities is expected as tariffs for gas and heat continue to rise, as are fuel prices. In turn, price of clothing and footwear, as well as some services, may fall. Rising food prices are expected to continue to play an increasing role in price growth in the coming months, but the pressure of utility bills on the average price level due to the base effect will gradually decrease - especially in the second half of the year," said Orleane.

The Central Statistical Bureau will release statistics on consumer price changes in January tomorrow.

As reported, Latvia's annual inflation rate averaged at 3.3 percent in 2021, according to the data released by the Central Statistical Bureau (CSB). However, inflation dynamic was fast - Latvia closed 2021 with a 7.1 percent inflation rate in the fourth quarter. In December 2021, Latvian consumer prices jumped 7.9 percent against the respective period a year ago.