Latvia Inflation May 2016


Annual decline in consumer prices stabilizes in May

In May, consumer prices rose 0.6% over the previous month, which came in above the 0.4% increase observed in the previous month. According to the statistical office, the monthly increase stemmed mainly from higher prices for food and non-alcoholic beverages as well as for transportation and clothing and footwear.

On an annual basis, consumer prices fell 0.8% in May, which mirrored the reading registered in April. May’s print marked a fifth consecutive annual drop and represents the lowest level since June 2010. Due to May’s fall, the trend suggests that a return of inflation to positive territory is not in the cards in the coming months. The annual average variation in inflation fell from minus 0.1% in April to minus 0.2% in May.

Moreover, harmonized consumer prices—derived from the Harmonized Index of Consumer Prices (HICP)—increased 0.4% month-on-month in April (the last month for which data are available), which came in below the 0.8% rise observed in March. HICP consumer prices fell 0.7% annually in April, which followed a 0.6% fall in March. Annual average HICP inflation was zero in April (March: +0.1%).

The Central Bank sees HICP inflation averaging 1.3% in 2016. FocusEconomics Consensus Forecast panelists expect HICP inflation to average 0.5% in 2016, which is down 0.2 percentage points from last month’s projection. For 2017, the panel expects inflation to average 1.9%.

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Latvia Inflation Chart

Latvia Inflation May 2016

Note: Month-on-month changes and annual variation of consumer price index (CPI) in %.
Source: Central Statistics Bureau.

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