OREANDA-NEWS. October 09, 2008. The annual inflation index is continuing to diminish despite the rise of prices to education services, and increase of prices to clothing and footwear, which is characteristic for this month. If we compare with last year’s September, then prices have grown by 14.9% on average, but in comparison to August – by 1.1%, reported the press-centre of Latvijas Krajbanka.

In September with the end of summer discount season and entry of new collections we usually observe price increase to clothing and footwear. This year the tendency explains a half of month inflation. The pay for educational services experienced considerable increase – for 18.8%, prices to several food products also grew.

The last months` statistics indicates that the annual inflation is diminishing already for the fourth month. Considering the economic situation in the world and in Latvia, we can speak about the tendency of price increase tempo slowdown. There is no doubt that in October and November the new tariffs will affect inflation negatively, nevertheless, if we speak about the next year perspectives, we can hopes to experience one-digit inflation.

One of the main factors, restricting the price increase, is fuel price decrease. Along with oil price record in the middle of the year, also prices in fuel in Latvian experienced essential increase. Nevertheless since July the oil quotations diminished by 40%, which can be reflected also in the prices to fuel in Latvia.

During the next year the consumption in Latvia will remain weak, which will also serve as a factor for inflation decrease. In order to restrict the fall of sales, companies will have to review the price policy to their foods and services. No doubt, that in some retail sectors, for instance, sale of food, clothing and footwear, mark-up is still to high without reason. In the existing market conditions businessmen have to be flexible: if there is any possibility to reduce price, which could further biggest demand, and therefore, not allowing essential decline of companies financial ratios, then is should be used.