In Latvia, inflation is higher than the eurozone average — the latest measurements are over 4%, which is significantly above the norm. The main reason for high inflation is food prices, said the president of the Bank of Latvia, Mārtiņš Kazaks, in an interview with Latvian Television's Rīta Panorāma.
He emphasized that the rise in food prices in Latvia has been sharper than could be explained by global trends.
Kazaks noted that such problems cannot be solved with monetary policy tools. "Our solution would be higher interest rates, but to solve competition issues in one sector by raising interest rates, we would create new problems in other sectors," Kazaks explained.
According to the president of the Bank of Latvia, a more transparent pricing policy and stronger competition from both retailers and producers would be the right solution.
Kazaks said that "gradually steps in the right direction are being taken, we need to be a little more patient, but patience alone will not solve anything — pressure must also be maintained, as no one will want to lower prices on their own."
At the same time, Kazaks expressed hope that a price comparison tool will soon enhance competition, allowing consumers to see where and how much products cost.
High inflation is also influenced by relatively rapid wage growth. This means that consumer prices are rising as service prices increase, where a large portion is attributed to wages, Kazaks explained.
He emphasized that the public sector plays a significant role, where employment has proportionally increased.
At the same time, Kazaks noted that the budget deficit does not contribute to lowering inflation.
