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Monday 23.07.2018 | Name days: Magda, Magone, Mērija
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Bank of Latvia: this year's inflation could be lower than expected

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The average annual inflation level could prove to be lower than the expected 2.0% in 2013; even given the often mentioned increases in prices for electrical energy, as said by Bank of Latvia economist Daina Paula.

Even though the compulsory procurement component (CPC) will be increased this April, according to information from AS Latvenergo, the tariff will not be changed at the expense of the reduction of the electrical component – it will only grow along with the market’s liberalization (scheduled for autumn). The increase of the price on electrical energy may well be balanced by beneficial gas and heating energy price outlooks.

Annual inflation of February 2013 continued to reduce and was 0.3%. Inflation was affected by the reduction of regulated prices, because, as expected, heating prices reduced along with the reduction of the price on natural gas, notes the economist.

February’s inflation was also affected by fluctuating global prices on oil. The rise stopped in the end of February, and the positive situation on the market, which was noted in the beginning of March, allow for the possibility that the rise of prices on fuel will not be present in Latvia. The rate of price rise on fuel in Latvia also reduced, because last year’s rate was more rapid and continued throughout the whole of March.

According to in formation from the UN Food and Agricultural Organization, global food prices were stable and remained below those of February 2012. The most fluctuating categories that can potentially affect Latvia’s market even more include: dairy products (expected price increase), sugar (expected price reduction), and grains (expected price reduction). The increase on prices for vegetables and bread in February also contributed to a slight consumer price increase on the Latvian market. Global prices, on the other hand, experienced the opposite – dairy products became cheaper.

The consumer price increase in Latvia is likely to be positive, because the assortment of the new season’s vegetables will increase. Winter season clothing sales will mostly be over, and the market will have goods to sell in the spring season – at higher prices. The good new is – according to the outlook of AS Latvijas Gāze, prices for natural gas and heating energy are not expected to change, concludes the economist.

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