| Latvian EconMin expects further lowering of prices, deflation also in 2010 |
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| Monday,July 06,2009 Posted: 13:49 BJT(0549 GMT) |
| From:Baltic News Service Article type:Original |
RIGA, Jul 04, BNS - Even though 12-month inflation in Latvia in May this year was still quite high at 4.7 percent, it is going to reduce in the coming months and deflation is expected also in 2010, the Economics Ministry said in the report on the macroeconomic situation to be reviewed by the government next week.
The ministry said that the 12-month consumer price change in December this year could be negative (-2 percent) and deflation was also expected in 2010 when prices could drop another 3.5 percent during the year.
The growth of consumer prices slowed down in the second half of 2008 upon weakening domestic demand and lesser influence of supply-side factors (administratively regulated prices, fuel and food prices, higher excise tax on tobacco products), said the ministry.
In the first five month of 2009 the consumer prices in Latvia grew 2.6 percent from December 2008, which is by 5.8 percentage points less than in the same period last year. It means that the 12-month inflation in January-May this year has dropped to 4.7 percent.
Prices will keep moving down this year. Most of the businesses plan a significant reduction of producer prices in 2009 due to the declining demand. Exporters have said that prices will be affected also by the fact that several trade partners have devaluated their national currencies that increases price competition and reduces competitiveness of Latvian companies.
After several years of booming growth Latvia experiences a sharp economic downturn.
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