VS.lv: “Food prices have stabilized”,

VS.lv: “Food prices have stabilized”,
VS.lv: “Food prices have stabilized”,

In April, compared to March, the level of consumer prices increased by 0.5%. Clothing and footwear, alcohol and tobacco products, as well as a group of various goods and services had the most significant impact on price level changes. Annual inflation rose to 1.1%.

“Despite some setbacks, the inflationary pressure in the Eurozone continues to decrease. This is indicated by company surveys and sentiment indicators”, – says economist Dainis Gašpuitis.

Producer price indices also point to lower prices of consumer goods. Commodity prices have fallen significantly from their 2022 peak, although in some cases they are still significantly higher than before the pandemic. Energy prices, which raised inflation to the highest levels in the EU, have had a particularly large impact on consumer prices in Latvia. On the other hand, currently the normalization of energy prices has the opposite effect and has allowed inflation to decrease rapidly.

“The cost of housing is the only group where the price level has fallen. In the other groups, the price level has increased during the year. Latvia is no exception, and similar to other countries, energy prices for consumers are still high from a historical point of view. Therefore, a slight further drop, e.g. for heat energy tariffs, is possible, but not more. However, if energy prices fluctuate, inflation can quickly revive”, – emphasized the expert.

For now, however, their price prospects, at least in the short term, seem stable. The rate of inflation will increase towards the second half of the year also because the base effect of high energy prices will gradually disappear. Food prices have stabilized and rapid changes are not expected, however, as consumption picks up, at much slower rates and at different rates between groups, prices will continue to climb. Periodically, discounts and attractive offers may appear on consumer goods.

This will be related to international competition, especially China’s desire to realize excess spare capacity to support its exports. In services, the increase in prices will continue to be driven by wage growth. Therefore, in this segment, the price increase will be observed more clearly. The only question is how fast this can continue without consumer resistance.

The article is in Latvian


Tags: VS .lv Food prices stabilized


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