7/29/2019 Flash comment: Latvia - March 8, 2013
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Flash comment: LatviaEconomic commentary by Economic Research
Department March 8, 2013
Consumer price inflation continues retreating
Consumer price growth, %
-2
-1
0
1
2
-8
-4
0
4
8
2010 2011 2012 2013
CPI, mom (rs) Goods, yoy
Services, yoy Source: CSBL
Contribution to CPI annual growth, pp
-6
-4
-2
0
2
4
6
2010 2011 2012 2013
Food Transport
Housing Other
Total, yoy growth Source: CSBL
Consumer inflation expectations andCPI growth, points
-15
-10
-5
0
5
10
15
20
-60
-40
-20
0
20
40
60
80
2008 2009 2010 2011 2012 2013
Retail, over the next 3MServices, over the next 3MConsumers,
over the next 12MCPI growth, YoY (rs) Source: Reuters
Consumer prices continue to surprise on the downside. In
February2013, Latvian consumer price index (CPI) fell by 0.1% in
comparison to
the previous month. Monthly deflation is not a usual thing for
February;
last time it was observed in February 2002. This time it was
mostly
influenced by a fall in food prices, particularly meat. A
decline in heating
tariffs also contributed to monthly deflation, but it was
largely offset by an
increase in fuel prices.
In February, consumer prices were just 0.3% higher than a year
ago
(down from 0.6% in January). Annual deflation was observed in
clothing
and footwear (-1%), household equipment (-2.2%), transport
(-0.8%),
communications (-6.7%), and education (-1.1%). Food prices were
by
1.8% and housing by 0.9% higher than a year ago.
12-month-average annual inflation was 1.8% in February, thus
Latvia
continues to fulfil Maastricht price stability criterion.
Outlook
We do not expect a pickup in food and fuel prices in the coming
months
global food prices have stabilized; oil prices have retreated
somewhat
during the last month. Housing tariffs are also anticipated to
remain
largely stable. Overall, we believe that annual consumer price
growth will
remain marginally above 0% in the coming two months.
Current Swedbank forecast is 1.9% average annual consumer
price
inflation in 2013; however, taking into account
weaker-than-expected
price developments in the beginning of the year, average
inflation islikely to be less than that.
Lija Strauna
Senior economist
+ 371 6 744 5875
[email protected]
Swedbank Economic Research Department
SE-105 34 Stockholm,
[email protected]
Legally responsible publisherCecilia Hermansson, +46 8 5859
7720
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