Food prices in Latvia starting to follow global trends - Kazaks

RIGA - Food prices in Latvian shops are starting to follow global trends, Bank of Latvia President Martins Kazaks said in an interview with commercial TV3 television today.

He said that in previous years in Latvia there was a tendency that if food prices were rising in the world, prices in Latvia "kept up", but if food prices were falling in the world, they remained at the same level in Latvia and did not decrease.

"It gradually looks like prices are starting to follow global trends - if they are falling globally, they are falling here," said Kazaks.

He also welcomed the introduction of a low price basket in Latvian retail sector.

Kazaks also pointed out that the Bank of Latvia could only limit food price increases in one way, namely by raising interest rates, but in this case this would not be the right solution.

"Monetary policy can solve price rises in one way - by raising interest rates, but solving structural problems in one sector by raising interest rates and then driving the rest of the economy into recession would be the wrong medicine. So monetary policy cannot solve the food price hike here," said Kazaks, noting that the Bank of Latvia's role in this matter is more as an economic expert.

He also said that the citizens, who vote with their wallets when buying goods, play a very important role in the food price issue.