Latvia: Inflation rises in September
October 8, 2012
In September, consumer prices added 0.5% over the previous month, which contrasted the 0.3% drop observed in August. The monthly reading reflected higher prices for clothing and footwear as well as for alcoholic beverages and tobacco. As a result of the monthly increase, annual headline inflation inched up from 1.7% in August to 1.8% in September. Meanwhile, in August, HICP inflation (based on the harmonized index of consumer prices) remained unchanged at July's 1.9% (the latest month for which data are available). Consequently, annual average HICP inflation dropped from 3.3% in July to 3.1% in August. At its 13 September monetary policy meeting, the Central Bank decided to cut the refinancing rate from 3.00% to 2.50%. The Bank's move aims to spur economic growth and counteract a negative impact from Europe's debt crisis, in the midst of a favorable inflation scenario and deteriorating prospects in the Eurozone.
Author: Ricardo Aceves, Senior Economist