RIGA - Prime Minister Indulis Emsis' government has announced it planned to create a special commission to examine the recent spike in consumer prices that, according to the officials, could be due to preaccession speculation and artificial increases by businesses and retailers.
The Economy Ministry has singled out sugar as one product whose price has risen too quickly, while other goods that have come under state scrutiny are milk and milk products.
"Many entrepreneurs and businessmen are taking the opportunity to manipulate the market to make more money during the period of Euroshock," Iveta Balode, spokeswoman for the Economy Ministry, said.
"The commission would not only investigate the recent price increases but also how to control this situation in the future," Balode added.
Ilona Lice, spokeswoman for Prime Minister Indulis Emsis, said that the special commission would not only look into price increases, but also into other areas of the economy.
The special committee could be formed either this week or next week, Lice added. When it is formed, the commission is likely to consist of economists, scientists and possibly even businessmen.
However, many economists have dismissed the calls for an independent commission, claiming instead that the recent rise in prices and inflation were due to currency exchanges and unlikely to have a connection with alleged nefarious business practices.
Inflation "is very well reflected by the currency exchange," Morten Hansen, an economics lecturer at the Stockholm School of Economics in Riga, said.
"Since most of our goods originate in the EU, the appreciation of the euro against the lat explains the increases," he explained.
Unlike Estonia and Lithuania, Latvia has its currency pegged to a basket of currencies that contains the U.S. dollar. Thus a decline in the dollar against the euro will lead to a fall of the lat vis-à-vis the euro. This, in turn, will fuel inflation, particularly on imports from eurozone countries.
According to the Central Statistics Bureau of Latvia, consumer prices have been rising every month since January. In April, prices increased by an average of 0.08 percent and were up a staggering 5.7 percent since March of last year.
One bank analyst has gone so far as to predict a 10 percent annual inflation for Latvia.
Both Latvia and Estonia recently experienced shortages in coarse salt due to massive purchases made by people believing that the product will not be allowed in the European Union. The development of a special committee could be a populist move by the government to play on fears of a conspiracy to manipulate market prices.
However, retailers were quick to dismiss the accusations. "I don't think the raise in prices is related to market speculators," said Henriks Danusevics, head of the Latvian Traders Association.
