Latvia's Ministry of Finance assessed that inflation will remain above 3% for the rest of 2026 and could approach 4% by year end if fuel prices do not fall substantially and heating tariffs rise. Consumer prices increased 0.2% month on month and 3.2% year on year in September, with higher fuel costs driving both increases. Average diesel prices reached a record EUR 2.077 per liter in September, up 39.1% from a year earlier, while 95 octane gasoline rose 29.5% to EUR 1.937 per liter. Excise duty reductions applying from Oct. 1 through year end could lower pump prices by about EUR 0.08 per liter if passed through fully. However, only 58% to 64% of the potential EUR 0.086 per liter reduction from April's diesel excise cut reached consumers, and the ministry expects the latest reduction may also be only partly reflected in retail prices. Food prices provided some offset, falling 4.8% year on year in September, with deflation expected to continue through the remaining months of 2026. The ministry nevertheless expects food prices to rise in 2027 as high oil and gas costs affect production and logistics, while disruption to Black Sea grain exports adds pressure to global commodity prices.
Latvia's Ministry of Finance expects inflation to approach 4% by year end as fuel costs remain high
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 stay elevated. September inflation was 3.2%, while record diesel prices prompted a further excise duty cut that may not be fully passed through to consumers. Food price deflation is providing a temporary offset but is unlikely to continue in 2027.