OREANDA-NEWS. November 22, 2012. In its regular meeting the Bank of Latvia Council discussed the latest trends in Latvia’s economic development and took decisions regarding further directions of monetary policies.

The main conclusions are related to economic activity in the country, inflation dynamics and lending development.

On inflation
The annual inflation in October, at 1.6%, reached its lower level since autumn 2010, which means that Latvia at the moment has the third lowest inflation in the EU. We had predicted that over the course of the year inflation will drop, yet in October the dip was a couple of percentage points deeper than we had expected. That, of course, is good news.

What determined this? Three factors deserve mention: a drop in telecommunications services as a result of competition, sales of some goods as well as a drop in fuel prices. Some of these factors are likely to have a one-off impact (e.g., sales prices of beverages), whereas the influence of other prices, e.g., for communication services, will be longer-lasting.

With inflation in Latvia remaining at a low level for a long period in time, as you can see, the 12-month average inflation indicator, which is used in evaluating a country’s readiness to participate in the euro area, for a second consecutive month was lower in Latvia than the corresponding criterion. The above indicates that this trend is likely to hold.