Economists in Latvia attribute the stability of inflation rates in January to a decrease in fuel prices, which has positively impacted the costs of consumer goods and food.
In a recent analysis, economists from Latvia, including Kārlis Purgailis from Citadele Bank and Pēteris Strautiņš from Luminor, observed that inflation rates have remained stable largely due to a notable decline in fuel prices. Compared to a year ago, the price of fuel in Latvia is significantly lower, easing the cost pressure on businesses and the transport sector. This reduction in fuel costs has a ripple effect, contributing to a more favorable outlook on consumer goods and food prices during this period.
Purgailis highlighted that over the past month, food and non-alcoholic beverage prices only increased by 0.3%, suggesting that seasonal effects linked to the end of Christmas promotions are still influential. In further detail, Strautiņš explained that the decrease in fuel prices, which fell by 7.6% year-on-year and 3% month-on-month, is a key factor in maintaining the inflation rate steady through January. This stability, according to him, is also supported by the typical January markdowns on clothing and footwear, although this year’s markdowns didn't exert as much downward pressure as in previous years.
Astute observations from these economists indicate that the Latvian economy is maneuvering through potential inflationary pressures with a degree of resilience, thanks in part to favorable energy price movements. The implications of these inflatory trends suggest a cautious optimism regarding consumer spending patterns and the broader economic stability for the months to come.
