Food prices treading higher

RIGA - The coming months could see the price increase of food products reach the level last seen in 2008, despite the current lower salaries in Latvia, warned Zigurds Vaikulis, chief market analyst at Citadele Asset Management, during a discussion held by the business portal Nozare.lv. According to Vaikulis, the agricultural indexes, which comprise all the largest food groups, have grown by 30 percent at the stock exchanges, and they have now surged to the highest levels of 2008.

Food prices have not yet been affected by the increase of energy resource tariffs, as the heating season has not started yet. Expenses on energy resources only make up 5 to 10 percent of food prices, according to the estimated numbers by Citadele Asset Management.

In August 2008, the average price of a liter of 2 percent milk was 0.62 lats (0.86 euros), which compares to the present prices of 0.36 lats to 0.62 lats in Riga supermarkets. A kilogram of rye-bread cost 0.96 lats in 2008; now it costs from 0.45 lats to 1.30 lats. A kilogram of ham cost 3.24 lats on average in 2008 compared to 2.39 lats to 3.80 lats this August, according to the data of the Agricultural Market Promotion Center.

Compared to August of last year, consumer prices in Latvia have decreased by 0.3 percent, according to data from the Central Statistical Bureau. Over the past year, prices of goods have increased by 1.4 percent, while prices of services decreased by 4.4 percent.

Food and clothing manufacturers have already expressed their concern on the inevitable increase in prices due to external conditions, namely, the growing prices of raw materials and energy resources on global markets.