Kalvitis targets 5 percent inflation in 2006

  • 2006-01-04
  • From wire reports
RIGA - Prime Minister Aigars Kalvitis said on Dec. 30 that the government hoped to bring inflation down to 5 's 5.5 percent next year.

In an interview to Latvian Radio, he said, "Currently the inflation rate is 7.3 percent, and we hope to reduce it to 5 's 5.5 percent next year."

"It is a reasonable and realistic reduction," he added.

The prime minister said that the government had managed to stabilize inflation this year, as the consumer price index did not grow any further though it still remained high.

Currently Latvia has the highest inflation in the EU25, though it also tops the union in terms of GDP growth. Government officials continue to blame world energy prices for much of the price-rise, but the Bank of Latvia has repeatedly said that the government could do more fiscally to battle inflation. (See interview on Page 18.)

Kalvitis stressed that this year's inflation would be influenced by the energy sector and the increase of fuel and gas prices for Latvian consumers, particularly on the backdrop of a price hike by Gazprom, Russia's monopoly natural gas producer that is raising prices for all three Baltic countries.

"Speaking about the 35 percent tariff increase requested by Latvijas Gaze from May 2006, I think that the regulator has to evaluate its validity and methodology for calculating the tariff hike," Kalvitis said.