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Latvia Inflation July 2023

Latvia: Harmonized inflation declines to lowest level since October 2021 in July 2023

Harmonized inflation came in at 6.6% in July, which was down from June’s 8.1%. July’s reading marked the lowest inflation rate since October 2021. Looking at the details of the release, prices for food and non-alcoholic beverages grew at a softer rate in July, as did housing and utilities prices. Meanwhile, prices for transportation dropped at a slower rate.

Accordingly, the trend pointed down, with annual average harmonized inflation coming in at 17.0% in July (June: 18.3%). Meanwhile, consumer price inflation fell to 6.5% in July, from June’s 7.9%.

Finally, harmonized consumer prices increased 0.76% in July over the previous month, swinging from June’s 1.38% fall.

Looking ahead, our panel sees inflation moderating further in the coming months thanks to the European Central Bank’s monetary policy tightening cycle and lower year-on-year commodity prices. Nevertheless, high nominal wage growth, sturdy consumer demand and the upcoming heating season will likely keep price pressures elevated for the remainder of 2023. Energy price spikes pose an upside risk to the outlook.

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