Inflation rate dips, but prices still rising

RIGA - Latvia's average consumer price level in June 2008 rose by 0.7% compared with the May figure, says Latvijas Statistika. The rise was consistent for both goods and services.

In June the price growth of fuel (+4.7%), fresh meat(+5.9%), vegetables and potatoes (+3.0%). But there was some consolation for anyone who can no longer afford to run a car, as the priceof footwear dropped by 5.5%, caused byseasonal sales as retailers clear out their remaining summer lines.

Prices continued to grow in the service sector:catering, health care, package holidays, financial, personal careestablishments, repair of household equipment and computer equipment,cleaning of clothing and footwear repair, as well as services relatedto maintenance of personal transport vehicles became more expensive.

However, flagging demand seems to be making sellers slash the prices of non-essential and luxury items. Prices decreased for cars, household equipment,TV, audio, visual, photographic and computer equipment, equipment forsport and open-air recreation, as well as tools and equipment for houseand garden, seeds, plants and flowers, reimbursed medicines, glasswareand tableware.

The year-on-year inflation figure now stands at 17.7% - slightly down on May's figure of 17.9%.

In the 1st half of 2008 the consumer prices grew by 9.1%.

Commenting on the figures, Nordea Markets analyst Andris Larins said: "This drop in annual inflation was something we expected. Unfortunately we cannot yet say that this trend will be maintained as inflation during the summer months is traditionally lower than at the beginning and end of the year."