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“In March, for the first time since the middle of last year, low inflation has been observed in Latvia again, and compared to March 2020, consumer prices in Latvia have increased by 0.3%, according to information published by the Central Statistical Bureau. Inflation The return is certainly not a surprise and was already to be expected, as starting in March, all economic indicators are compared to the beginning of the pandemic last spring, when economic activity was significantly lower than now. Therefore, in the coming months, inflation in Latvia will continue to rise and by the summer it could reach 2%, “assesses the banks”Citadel“economist Mārtiņš Āboliņš.
“The 3.4% rise in fuel prices also had a strong upward effect in March, pushing up overall consumer prices by 0.2 percentage points. The rise in fuel prices continued to be driven by the sharp rise in world oil prices in recent months, which rose by an average of 5% in March. At the beginning of the month, oil prices rose sharply to a two-year high of $ 70 a barrel, driven by OPEC and the decision of its allies to maintain most of the pre-established oil production restrictions until April, as well as attacks on Saudi oil companies. However, in the second half of the month, oil prices fell and remained at around USD 62-64 per barrel at the end of the month. This was driven by data on rising crude oil reserves in the United States and concerns about falling demand in connection with announcements of the resumption or maintenance of strict Covid-19 restrictions in several European countries, failing to provide rapid population vaccination, ” Ministry of Economy Head of the Analytical Service Jānis Salmiņš.
“Inflation continues to pick up in the euro area, with an annual increase of 1.3% in March. The highest growth last month was in energy prices (+ 4.3%), followed by the services sector (+ 1.3%). Rising commodity prices as well as weaknesses in world trade supply chains, such as the current shortage of semiconductors, will take care of the euro area producers’ sentiment PMI, which reached unexpectedly high levels last month. that, according to global analysts, the sharp rise in prices is not due to structural change and is therefore likely to be short-lived, “points out”Swedbank“economist Laura Orleāne.
Speaking of the future, banks’Luminor“Economist Pēteris Strautiņš says that there is no doubt that inflation will rise. Although the European Central Bank is failing to achieve its 2% inflation target, due to convergence processes, average inflation in Latvia will be above rather than below this level in the long run.
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