Latvia: Inflation closes 2010 at 18-month high
January 7, 2011
In December, consumer prices rose 0.1% over the previous month, which was half the price increase observed in November. The increase mainly reflected higher prices for food and non-alcoholic beverages (+1.4% month-on-month), which were partially offset by falling prices for clothing and footwear (-2.3% mom). As a result of the monthly increase, annual headline inflation jumped to 2.5% in December, up from 1.9% in November. After 11 consecutive months of deflation, the economy returned to inflation in September and finished the year recording the highest price increase since July 2009. Meanwhile, annual average harmonised inflation rose from minus 1.5% in November to minus 1.2% in December. In its September macroeconomic development report, the Central Bank expects harmonised inflation to average minus 1.6% in 2010 and minus 0.6% in 2011.
Author: Ricardo Aceves, Senior Economist