No surge in inflation is forecasted.
As previously reported, inflation in Latvia for the year was 3.7%. Here’s how an expert commented on this data.
"Over the past year, price increases and attempts to influence them were one of the main topics on the public agenda. But all the drama was 'compressed' into the first four months of last year, when the price increase significantly exceeded the typical for the season. Since then, almost nothing interesting has happened in either a good or bad sense; the price level remained almost unchanged, and in December it was only 0.1% higher than in April. The only truly unusual month was November, when, on average, prices atypically decreased by 0.3% for that month. This was facilitated, in turn, by consumer-friendly raw material markets, which reduced annual inflation from 4.3% in October to 3.5%. According to the latest data, this year the average inflation will be around 2.5%.
... The 7% decrease in butter prices allows consumers to start enjoying the fall in prices for this product on exchanges from over 700 euros per ton in August to 450 euros at the end of the year. Alcohol and tobacco prices fell by 2.1% in a month... Oil-related political drama fills newspaper pages, while the price of this product has been almost impeccably stable and low since October, gradually deflecting the benefit to consumers in the leisurely manner typical of traders, and fuel prices fell by 1.2%," stated the published comment by Luminor Bank's Chief Economist Peteris Strautins.
So what should we expect in terms of inflation in the coming year? Here, the economist also does not predict anything sensational.
"Currently, nothing suggests that there will be even a drop of interest in the news about consumer prices in 2026. The raw material markets are calm, except for a few industrial metals, particularly copper prices, but their impact on the consumer price index is very slow and blurred. Prices for food will be influenced by the sharp drop in butter prices, as well as some exotic products from the beginning of 2025, which will please consumers of certain products. This does not mean that chocolate prices will return to previous levels - cocoa bean prices have fallen more than half from their peak at the beginning of 2025, however, over a four-year period, they have still increased by 140%. Other products traded on exchanges that affect the prices of our staple foods are either gradually decreasing (grains, milk powder) or not changing much (meat).
The influence of energy markets will also be very light and rather downward. The competition of renewable resources and significant investments in infrastructure over the past year have significantly reduced the price of liquefied gas. A large surplus of oil extraction capacity keeps the price at a marginal minimum, making it unprofitable for many producers to operate. A significant event - last Thursday, the U.S. government's attempt to auction 80 square kilometers of federal land in Colorado to increase shale oil production ended in failure. At current prices and costs, it simply isn’t worth doing. Donald Trump's geopolitical 'creativity' in Venezuela has generated hope for further price declines. However, oil in this country is not only expensive to extract but also located in a dangerous region, so U.S. oil companies have clearly stated that investing in this land is currently impossible. When it comes to electricity prices, every new solar or wind farm, or battery park, influences price reductions, while the risk is the increase in consumption in Latvia, as well as significant investments in data centers in Northern countries, which rapidly 'consume' the surplus electricity production capacity.
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