Saturday , October 23 2021

Economists: inflation will continue to be sustained by labor costs



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In May 2019, compared to May 2018, the average level of consumer prices increased by 3.3%, according to the latest data from the Central Statistical Bureau (CSB). The prices of goods rose 3.4% and those of services, 3.1%. Economists estimate that this year inflation may rise slightly over last year.

"Although in May this year there has been a moderate increase of 0.2% in the month, compared to April this year, the annual rate of inflation has remained relatively high – the average level of prices in May this year was 3.3 year-on-year increase of 3.4% in May, while prices for services rose 3.1%, compared to the same month in 2005. Linda Vildava, an economist of Swedbank.

SEB bank economist Dain Gashpuit says a positive news is the reduction of gas tariffs for households. However, in the fall, rigans are more likely to expect higher heat rates. Similarly, inflation will continue to be supported by rising service prices, driven by continued increases in labor costs.

"This year's average annual inflation may be higher than that observed in 2018. It is influenced by several supply-side factors related to the increase in taxes and tariffs, as well as the demand side driven by economic activity and wage growth. At the same time, inflation remains highly dependent on the world, fluctuations in oil and food prices, "says Ieva Šnīdere, an analytical analyst at the Ministry of Economy.

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