LATVIA – Swedbank
October saw an increase in fuel prices, which had been declining over the previous three months. Prices rose by an average of 4.7% during the month and 32.1% during the year. Part of the impact was the recent OPEC+ decision to reduce the size of oil production, which raised the oil price slightly.
Over the past year, prices of vital expenditure groups such as food and housing-related goods and services have risen significantly. They account for more than 40% of the population’s spending. Low-income households have felt the price pressure the most. It is more difficult for them to find ways to save to cover skyrocketing food and housing costs.
Although inflation declined in October, it will still remain high in the coming months and it cannot be ruled out that it will rise slightly above September’s peak. For example, energy tariffs have not yet reached their highest point. Producers and service providers will continue to pass some of the cost increases onto prices. However, this will be increasingly difficult to do, given the decline in purchasing power of the population.
According to Swedbank, inflation will be kept close to the high 20% until spring. A weakening of the price increase is possible during the next year. In 2023, inflation will average around 9%. Prices will continue to rise, but at a slower rate.
Laimdota Komare, economist at Swedbank