Latvia’s Ministry of Finance published an assessment showing that annual consumer price inflation accelerated to 3.2% in August, with prices rising 0.3% from July. Higher fuel costs were the main driver, while food price deflation provided a partial offset. The ministry expects inflation to remain above 3% during the rest of 2026 and potentially approach 4% by year-end as heating tariffs rise. Brent crude averaged USD 91.4 a barrel in August, up 34.7% from a year earlier, contributing to annual increases of 24.5% in diesel prices and 18.7% in gasoline prices. Oil exceeded USD 95 a barrel and Latvian fuel prices surpassed EUR 2 a liter in the first week of September, indicating a larger fuel contribution to inflation unless oil markets change materially. Heating costs were already 8.8% higher year over year in August and are expected to increase further during the October or November heating season as gas prices rise. Food prices fell 4.2% year over year in August, continuing the deflation recorded since April. Price declines accelerated for most products subject to the reduced value-added tax rate, including milk, poultry, eggs and bread. Food deflation is expected to continue during the remaining months of 2026, but high energy costs and disruption to Black Sea grain exports could push food prices higher in 2027.
2026-09-09Ministry of Finance (Latvia)
Latvia’s Ministry of Finance expects inflation to approach 4% by year-end as energy costs rise
Latvia’s Ministry of Finance expects inflation to remain above 3% for the rest of 2026 and potentially approach 4% by year-end as fuel and heating costs rise. Annual inflation reached 3.2% in August, driven by higher fuel prices, while a 4.2% decline in food prices provided a partial offset.