The increase in consumer prices is still observed for clothes and shoes, food, tobacco, as well as services

This year, in April, price changes characteristic of the month can be observed. In April, as in March, the dynamics of consumer prices was mainly determined by the seasonal increase in prices for clothes and shoes. Prices for clothes and shoes increased by 7.9% in April (prices for clothes increased by 4.9%, and for shoes – by 19.1%), which increased the overall level of consumer prices by 0.4 percentage points.

A significant price increase in April was for tobacco products, on April 1, when retailers take inventory of tobacco products in connection with the increased excise duty on several tobacco products on March 1, 2024. Prices for tobacco products increased by 7.5%, which increased the overall level of consumer prices by 0.2 percentage points. In turn, the stock is affected in April the prices of alcoholic beverages decreased.

Prices for services increased by 0.6% in April, which increased the overall level of consumer prices by 0.2 percentage points. In the services sector, the biggest increasing effect in April was the increase in prices for passenger transport by bus and train. The increase in prices for accommodation services, ambulatory services due to the increase in the cost of dental services, housing rent and pre-school education also had a big impact. On the other hand, the drop in prices for international flights and complex leisure services had a major reducing effect.

Food prices increased by 0.3% in April this year, which increased the overall level of consumer prices by 0.1 percentage points. It should be noted that food is characterized by a small price increase in April, and this year one can observe food price changes characteristic of this month. The biggest increase in prices was for bread and other pastries, poultry and chocolate, while the biggest decrease was for cheese and cottage cheese, coffee, fresh vegetables and fruit.

It should be noted that world food prices also rose very moderately in April – during the month by 0.3% on average, but during the year – compared to April 2023, they showed a drop of 7.4%. In April, the increase in the price indices of meat, vegetable oil and cereals compensated for the decrease in the price indices of sugar and dairy products. The fastest price increase in April was for the meat price index, which rose for the third month in a row. Prices increased for all types of meat except pork. The rise in prices for poultry and beef was mainly determined by a faster increase in demand from the leading importing countries, while the fall in prices for pork was due to the weak domestic demand in Western Europe and the independent weak demand from the leading importing countries, especially China. The price indices of vegetable oils and cereals increased very moderately. In vegetable oils, prices rose for sunflower and canola oil, supported by still solid global import demand and concerns about adverse weather conditions for winter rapeseed in Europe. On the other hand, after the decline in the previous three months, the average wheat export prices in the world stabilized in April, which was caused by concerns about unfavorable harvest conditions that will affect the 2024 harvest in certain parts of the EU, the Russian Federation and the United States. In general, grain prices in the world were 18.3% lower than in April of the previous year. On the other hand, the sharpest price drop for the second month in a row was for the sugar price index, which was mainly determined by improved production forecasts in India, Thailand and Brazil. However, the weakening of the Brazilian real against the US dollar and higher crude oil prices limited the sharper decline in prices. After six months of continuous growth, the price index for dairy products decreased moderately in April. Skimmed milk prices fell the fastest, driven by sluggish import demand for immediate supplies given high export availability, especially in Western Europe. In contrast, butter and whole milk prices rose on the back of solid import demand and shrinking inventories and production.

Fuel prices rose more moderately in April than in the previous two months – by 0.6%, which did not significantly affect the overall level of consumer prices. Gasoline prices increased, while diesel prices decreased.

World oil prices continued to rise for the fourth month in a row – by 5% on average during the month in April. In the first half of the month Brent oil rose to $91 a barrel on fears of supply disruptions amid widening conflict in the Middle East, with Iran launching missile and drone attacks on Israel in response to an Israeli strike on the Iranian embassy in Syria. With the Iranian attack causing minimal damage and fears of an escalation of the conflict receding, Brent in the second half of the month, the price of oil decreased to the level at the beginning of the month – 87-88 US dollars per barrel. Despite hopes for a truce between Israel and Hamas, attacks by Yemen’s Houthis near the Suez Canal continued to raise concerns about oil supply disruptions. Strong US inflation data dampened expectations of an early interest rate cut, but growth in China’s manufacturing and service sectors in April had a positive impact on the outlook for oil demand.

The biggest drag on stocks in April was a drop in prices for personal care and beauty products by 8.1%, which reduced the overall level of consumer prices by 0.2 percentage points.

Prices continued to decrease in April for housing-related energy resources, which together reduced the overall level of consumer prices by 0.1 percentage points. The biggest impact was the 1.3% drop in prices for electricity, which was determined by the drop in its price on the exchange, reducing tariffs linked to electricity exchange prices. Prices also decreased for solid fuel by 2.3%, and there was also a slight price drop for thermal energy – by 0.3%.

In April 2024, compared to April of the previous year, consumer prices increased by 1.1%. The annual average inflation was 3.4%.

It is predicted that, in the future, the main influence on price changes will continue to be the fluctuation of energy and food prices in the world, and it will also be determined by global development. At the same time, inflation in Latvia is affected by various factors on the supply side in connection with the review of taxes and tariffs, as well as on the demand side, which is promoted by the increase in wages. In general, in 2024, the average annual inflation is expected to be within 1.5-2%.