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Thursday, August 9, 2007

July 2007 Latvia Inflation

Well, not unexpectedly the July inflation reading came in on the high side (9.5% year on year). This is not especially surprising given all the inflation there must be in the pipeline after all the wage rises. Things will have to get worse before they get better on this front. The first sign that inflation pressures are easing would come from the Q2 wages data, assuming these have improved.

Of course coupled with the Q2 GDP data (see next post), there are few signs that Latvia is slowing anything like quickly enough (in order to avoid having a very dramatic deceleration later), so this must raise question marks about the effectiveness of the policy measures introduced so far.

For the record, here are the time series graphs for the consumer price index and the yaer on year inflation rate.

1 comment:

Latvian abroad said...

I have my doubts about the anti-inflation package. But, at the moment, it has not even kicked in yet. The documentation requirement on loans went into effect in mid-July and the balanced budget for 2007 is still mostly a promise. (The government will start debating the budget amendments on August 21.)

So, the only thing that might be having effect is the decrease of the new loans that the leading Scandinavian owned banks did, starting April-May, ahead of government's package. Well, the inflation graphs don't see effects of that, either...