Latvian consumer prices fell 0.3% in August on domestic demand
08.09.2010, 13:30Latvian deflation continued for an 11th month in August as a weak economy damped domestic consumption. Prices fell an annual 0.3 percent, compared with a 0.6 percent decline in July, according to Statistics Latvia.
The economy may contract 2 percent this year, compared with an earlier forecast for a 4 percent contraction, Prime Minister Valdis Dombrovskis said in an interview with the Latvian National Television program 900 Seconds today. The country should see inflation return by the end of the year, he said.
During its economic boom from 2005 to 2007, when gross domestic product expanded as much as 12.7 percent, Latvia had 25 months of inflation above 8 percent, peaking at 17.9 percent in May 2008. GDP rose in the first two quarters this year.
The economy is slowly rebounding from an 18 percent contraction last year as manufacturing and exports recover. Latvia turned to a group led by the European Commission and the International Monetary Fund for a 7.5 billion-euro ($9.5 billion) loan after its second-biggest bank failed.