Inflation will continue to rise in the coming months - Ministry of Finance

• Published date: 11 May 2022

RIGA, May 11 (LETA) - Annual inflation will continue to rise in the coming months as well, and a slowdown in consumer price growth can be expected only in the second half of the year, representatives of the Ministry of Finance (MoF) informed LETA.

The MoF concludes this on the basis of the dynamics of raw material prices on world markets, as well as taking into account the disruption of supply chains, the shortage of certain goods, the deteriorating geopolitical situation in Europe and consumer expectations about price changes.

The latest data from the Central Statistical Bureau confirm that the rise consumer prices in Latvia continues to pick up. In April 2022, the consumer price index increased by 2.2 percent compared to March, which is a very high inflation within one month, according to the Ministry of Finance. With a few exceptions, price increases were recorded for all types of goods and services.

In annual terms, the price increase was even more pronounced, increasing by 13 percent, which is the fastest price increase since the end of 2008. Double-digit inflation was already recorded in March this year, when the average price level was 11.5 percent higher than in the corresponding month of the previous year.

There are several reasons for the sharp rise in consumer prices, but they are mainly related to external factors, the representatives of the Ministry of Finance explain. Firstly, the sharp rise in prices is due to the energy crisis in Europe, which began last autumn. The rise in energy prices, especially gas and electricity, was driven by a number of factors on both the supply and demand sides.

Second, soaring food prices are global in nature. The increase in food prices has been observed since the beginning of 2021, which is negatively affected by growing demand in the post-pandemic period, the poor harvest of certain crops, the rise in the price of fertilizers due to high energy prices, and logistical disruptions. Third, Russia's aggression in Ukraine has exacerbated the negative effects of the above two factors and increased tensions in both energy and food markets.

In April of this year, the largest contribution to the rise in consumer prices was made by a 17.4 percent year-on-year rise in food and non-alcoholic beverages.

The availability of food products in certain regions of the world and rising prices is one of the most topical issues in the context of inflation around the world, according to the Ministry of Finance. In 2021, the level of...