Latvian Inflation Drops Back Slightly In June

Latvia's annual inflation rate declined for the first time in 13 months in June, but at a colosal 17.7 percent it still remained the highest in the 27-member European Union. According to Latvijas Statistika the decline from May's record 17.9 percent annual rate was due largely to a slightly lower than expected rise in food prices.



Compared to May the average consumer price level in rose by 0.7%. In June price growth in fuel was 4.7%, fresh meat 5.9%, vegetables and potatoes 3.0%, while footwear was down 5.5%.

Prices also decreased for cars, household equipment, TV, audio, visual, photographic and computer equipment, equipment for sport and open-air recreation, as well as tools and equipment for house and garden, seeds, plants and flowers, reimbursed medicines, glassware and tableware. In other words we already have significant durable goods price deflation.

What is really most striking about this situation is how, despite the fact that all the main economic data lead to the conclusion that Latvia is now deep in recession, unemployment has still to go up. According to the latest data from the Latvian Labour Board, the unemployment rate at 4.8% was unchanged in May from April, and the number of unemployed dropped from 52,897 in April to 52213 in May.