The rapid decline in inflation has abated. Inflation in Latvia increased to 1.1% in April, with prices increasing by 0.5% during the month.
In Latvia, in April, compared to the previous month, fuel prices increased slightly, while electricity and natural gas prices decreased slightly. Small energy price fluctuations here and there are common and we must say that we can look at it quite optimistically at the moment – it could have been worse. The prices of global energy resources, following the events in the Middle East, have risen slightly, but are nowhere near the peaks we experienced in 2022.
Of course, in a tense geopolitical situation, this is an unstable balance, which can quickly change and lead to an increase in the prices of various global resources, as the rhymes are directly felt here as well.
Prices of services are still growing relatively fast domestically, especially those services that are labor intensive. Employees are a valuable and increasingly expensive resource, which is also reflected in the price dynamics of these services. On the other hand, the increase in the prices of those services, where the contribution of other resources, including food and energy prices, to the final costs is significant, has subsided. The exception is transport-related services, which, taking into account the revision of public transport ticket prices, will see a considerable increase in April.
Although the demand for certain services tends to be flexible, the overall still strong increase in service prices shows that this demand has not significantly decreased at present.
Also in the coming months, it is expected that the average price level will continue to increase slightly, however, the differences in the prices of various products are more pronounced. For some (including certain food products and services) they maintain a considerable increase, for some others the prices even decrease slightly.
How much each of us will feel price increases in the coming months will be influenced by what goods and services we mainly consume and how flexible we are to substitute them if the prices of some products rise disproportionately while others fall.
