Macroeconomic Forecast Latvia

We hold to our forecast for growth in the Latvia consumer price index to average 2.6% in 2012 on the back of data released by the statistics bureau, which also showed our forecast for 4.2% average consumer price inflation in 2011 to be on the mark. Further bolstering our view is data released by the Central Statistics Bureau which show that producer price inflation eased to 6.5% y-o-y in December from 6.9% in November. We expect easing economic activity on lower global demand and the absence of a run up in commodity prices this year to feed through to lower consumer price inflation.

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