On the other hand, from the point of view of an ordinary working person, the situation is not so positive, as the wallets of many people become thinner and their purchasing power decreases. However, it must be borne in mind that it is the macroeconomic background that largely determines what tomorrow will look like for ordinary people.
If we look at it from this point of view and hope that the global epidemiological situation will not worsen with the spread of Covid-19, there is reason to believe that a large part of the population, who are getting worse this year, could improve next year, of course, economic data will not deteriorate. One of the news that suggests that the economy is picking up and that the situation could improve at the household level is the unexpected rise in inflation in July.
Impact of oil
The consumer price index or inflation started to decline sharply after the entry into force of the measures introduced in Latvia to limit the spread of Covid-19. This coincided with the widespread worldwide distribution of Covid-19, which in turn contributed to a significant decline in international trade. As the planes did not leave the hangars and the ships rocked in the docks, the demand for fuel plummeted. This led to a sharp drop in the price of oil, and as a result in the US in the second half of April black gold was temporarily traded even at a negative price. Namely, due to the low demand, when the oil contract expired, many of the holders of these contracts tried to get rid of them and were even willing to pay for it. As a result, the price of light crude oil fell temporarily below the price mark of minus 40 US dollars (hence minus 33.8 euros) per barrel. Since then, the situation has changed and black gold is already trading at more than $ 40 a barrel, but this time it is positive.
It should be emphasized that oil market developments have so far been an important driver of consumer prices in one direction or another. In the spring, its overall inflation curve was pushed down, but now the opposite is happening. However, even in July, for which recent inflation data have been compiled, fuel prices were significantly lower than a year earlier.
Estimates of the Central Statistical Bureau show that in the seventh month of this year, compared to July last year, fuel prices have decreased on average by 11.2%. Diesel fuel fell faster (minus 11.5%), while petrol prices fell by an average of 11%. For drivers using autogas, the price reduction was slightly more modest, ie on average 10.1%. This has also led to an overall decrease in prices in the transport segment, with transport expenditure declining by 3.9% on average over the year. True, prices have not fallen in all areas, and statisticians point out that during the year prices have risen for road passenger transport, maintenance and repair of personal vehicles.
Take to the streets
With regard to the change in headline inflation rates in July, the opportunity to go out of the house, visit shopping malls and buy popular goods and services has, of course, determined a lot, as long as financial opportunities allow it after the Covid-19 crisis.
–
Read the whole article in the newspapers Day Monday, August 17, in the room! If you want to read the content of the newspaper in printed format in the future, you can subscribe to it HERE!
