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Wednesday 19.09.2018 | Name days: Verners, Muntis
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Food prices change every three months

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Baltic news, News from Latvia, BNN-NEWS.COM, BNN-NEWS.RU

Bank of Latvia economist Krista Kalnberzina

A price remains more or less flat for 3.5 months on average, moreover, food prices are the ones that change the most often – every three months. It means neither producers, nor traders are slow to raise prices, when raw material surges. And there are actually no obstacles for them to do that, according to the Bank of Latvia economist Krista Kalnbērziņa.

The Baltics see continuous price fluctuations mostly due to spiking global prices. Growing taxes add to this even more. There have been many reasons for surging prices during the recent year – the weather, the global economic recovery, the growing demand, unrest in North Africa. All this has boosted the global prices of energy resources and food, flaring up the inflation everywhere, the economist stresses.

All in all, prices in the Baltics tend to fluctuate more than in Old Europe. Although it is clear, the current price climbs are affected by the global prices. What is not clear is why, despite globalization, spiking global prices have had a more severe effect on us than on the eurozone in total, where the inflation in December amounted to 2.2%.

Food price gains, that make up nearly one fourth of the total income of the people, are picking up at a faster pace in the Baltics than in the eurozone. Before the crisis, during the economic growth, we could explain the more rapid climb by gradual levelling with the European prices. However, now when the internal consumption is weaker than in the rest of Europe, foodstuff becomes more expensive due to the global prices.

The Bank of Latvia study showed it is possible for Latvian companies to change prices much more often that on average in Europe in both scenarios – prices gains or drops. There is no similar study carried out on the situation in Lithuania and Estonia, the expert says.

In future, when the level of income increases and production develops, price fluctuations will become less apparent. However, for the time being, we must remember that the prices in the Baltics react to both global price gains and drops very sharply. Therefore, it is expected when the global prices start decreasing, this will also be reflected in the consumption prices in Latvia. While it is on the contrary in Europe, surging raw material prices reach stores in a longer period of time, yet it also takes them longer time to leave them, Kalnberzina says.


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