FXstreet.com

Flash Comment

1

0

Latvia: CPI remains on the downtrend

Tue, May 12 2009, 12:05 GMT
by Violeta Klyviene

Danske Bank A/S


  • The Latvian Statistical Office has released consumer price inflation figures for April. As it was broadly expected, inflation decelerated further to 6.2% y/y (minus 0.4% m/m) from 8.2% y/y (0.2% m/m) in March.
  • The latest GDP figures showing a drop of 18% y/y in Q1 09 indicate that a “worst case” scenario for Latvia’s medium term outlook has become a reality. This will result in even more deflationary pressure in the economy.

Details

The Latvian statistics released consumer prices inflation today. CPI decelerated to 6.2% y/y (down 0.4% m/m) from 8.2% y/y (0.2 m/m) in March. The outcome was lower than consensus forecast and our expectation.

The decline in monthly CPI stems mainly from the drop in food prices (1.7% m/m) and housing costs (0.7% m/m), while increase in the prices of pharmaceutical goods, tobacco products, footwear and fuel have prevented more significant deceleration in consumer prices.

Assessment and outlook

Looking forward we expect inflation to remain on a downtrend in the Baltic States. The Latvian economy is in a deep recession and CPI is expected to move to negative territory relatively soon. We expect to see annual deflation in the fourth quarter of 2009. Based on the more pronounced deterioration in growth we have revised our average inflation forecast for this year down to 3.6% and to -0.2% in 2010.

Taking into account a tough budget position there is some minor upside risk related to rises in indirect taxes. However, the previous hike in VAT was relatively short lived and without strong second round effects. In general the period of consumer price decline will come to an end with a return to the recovery process, which is hardly possible until 2011-12.

Published on  Tue, May 12 2009, 12:08 GMT


Archive

Danske Bank  | Holmens Kanal 2-12, DK-1092 Copenhagen
http://www.danskebank.com/ | danskeresearch@danskebank.com

Legal disclaimer and risk disclosure

This publication has been prepared by Danske Bank for information purposes only. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from reliance on it. Danske Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. Danske Bank's research analysts are not permitted to invest in securities under coverage in their research sector. This publication is not intended for private customers in the UK or any person in the US. Danske Bank A/S is regulated by the FSA for the conduct of designated investment business in the UK and is a member of the London Stock Exchange. Copyright () Danske Bank A/S. All rights reserved. This publication is protected by copyright and may not be reproduced in whole or in part without permission.

Related reports

European Market Update - German IFO survey hits 15 month highs by TradeTheNews.com
Tue, Nov 24 2009, 11:00 GMT

Top Fundamental Stories - German IFO Climbs to the Highest Level in 15 Months by ecPulse.com
Tue, Nov 24 2009, 10:43 GMT

Daily World Market Update - Dollar's Day of Data; GDP, Consumer Confidence, Fed Minutes by World First UK Ltd
Tue, Nov 24 2009, 08:39 GMT

KBC News Picks - US: Existing home sales at highest level since February 2007 by KBC Bank
Tue, Nov 24 2009, 08:24 GMT

Top Fundamental Stories - Europe Ahead: Germany's GDP Unrevised as Imports and Exports Rise by ecPulse.com
Tue, Nov 24 2009, 08:09 GMT

indicator, latvia, inflation, cpi

View All

Related content


Interested in forex trading? forex brokerage firms!


FX Solutions LLC
Contact the broker/FDM
Open a demo account
MG Financial Group
Contact the broker/FDM
Open a demo account
GFT
Contact the broker/FDM
Open a demo account		Forex Club Financial Company
Contact the broker/FDM
Open a demo account		Alpari (UK) Limited
Contact the broker/FDM
Open a demo account

GET CASH BACK FOR YOUR TRADES!   Learn more about the Pip Rebate Program

Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer.

Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.

Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. FXstreet.com has not verified the accuracy or basis-in-fact of any claim or statement made by any independent author: errors and Omissions may occur.

Any opinions, news, research, analyses, prices or other information contained on this website, by FXstreet.com, its employees, partners or contributors, is provided as general market commentary and does not constitute investment advice. FXstreet.com will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.

©2009 "FXstreet.com. The Forex Market" All Rights Reserved.