Monday, 10 December 2007

Latvia, 13.7% inflation

Latvia inflation continues to climb

"Latvia's inflation continued climbing in November, reaching an annual rate of 13.7 percent, the country's statistics office announced Monday."

"It is the sixth month in a row that the consumer price index has risen in Latvia, which has the highest inflation in the 27-member European Union."

"Monthly inflation in November was 1.4 percent, led by food prices, which increased 3.4 percent, Latvian Statistics said. Bread prices alone soared 16.3 percent over the month."

Looks like investing in Bread could be a good investment. A 16% rise in a month, it's better than a mere 6% a year in real estate.

Again the ECB can do anything about that, as the Latvian government, banks, regulators had a blind eye on lending and credit standard.

The economy is now overheating and the whole country pays the price especially the poor or ones that can't hedge against inflation.
Latvia interest rates should have been much higher than the current 4% ... but remember the ECB is setting rates for the biggest economies namely Germany, France, Spain and Italy...the rest is negligible.

At the end it seems that the European economies are diverging due to inappropriate monetary policy for their economy.

I already highlighted the issue that the Baltics can have on the Finnish economy, So 2008 will be definitely an inflexion point...

Source: BusinessWeek
Related: The trigger..the Baltics?

1 comment:

Anonymous said... has an interesting article about house prices in Eastern Europe. The article concentrates on Bulgaria but towards the end suggests that there are housing bubbles across Eastern Europe. Here's the link: