Ilustratīvs attēls
The Latvian inflation rate hit 16.9% in May 2022. In the past 25 years only three months – April, May and June 2008 – witnessed a higher inflation rate, see Figure 1.
This has elicited a lot attention and debate and so it should since the effect of this can be felt by every single individual and company.
My ten cents will follow below with a set of graphs attached after the text.
But there is nothing particularly mysterious about the high inflation rate:
1) The Putin effect, part 1: Energy prices have exploded due to sanctions but also due to post-pandemic growth in the world economy (see Figure 4 for oil prices and Figure 3 for Latvia where in particular the Transportation (e.g gasoline and diesel) and Housing (e.g. electricity and heating) items have shot up in prices.
2) The Putin effect, part 2: In particular grain prices have risen dramatically due to less exports of grain from Russia (sanctions) and from Ukraine (seriously hampered by the war). Figure 3 reflects this as seen from generally much higher food prices (that are also affected by higher costs of transportation of food items).
