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Cablegate: Latvia: Inflation Up to 10.1 Percent in August

VZCZCXRO9197
RR RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHRA #0689 2601108
ZNR UUUUU ZZH
R 171108Z SEP 07
FM AMEMBASSY RIGA
TO RUEHC/SECSTATE WASHDC 4348
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS RIGA 000689

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: ECON EFIN PREL LG
SUBJECT: LATVIA: INFLATION UP TO 10.1 PERCENT IN AUGUST

REF: A) RIGA 166, B) RIGA 497, C) RIGA 628

1. (U) According to Latvia's Central Statistical Bureau (LCSB),
inflation in August increased .4 percent since July, bringing annual
inflation up 10.1 percent year-on-year. This marks the first time
Latvian inflation has reached double digits since January 1997 when
consumer prices rose to 11.4 percent. Latvia's inflation rate
remains the highest in the EU, according to the EU's Eurostat. LCSB
reported that higher prices for tobacco products, catering services,
meat and meat products, and heat energy had the biggest effect on
inflation in August.

2. (U) Inflation is unlikely to decrease in the near term due to
pressure on the government to increase wages. Doctors and teachers
are demanding salary increases days before Latvia's Saeima
(legislature) is due to adopt on September 20 the mid-year budget
review. Proposals are also on the table to increase the salaries of
the President's Chancery--the lowest salary would be raised from 140
lats per month to 320 lats, and the highest salary would be raised
from 3418 lats per month to 4800. The Saeima itself intends to boost
15 fold the amount paid in one-off bonuses to MPs and Saeima
employees, making any arguments that others should tighten their
belts for the good of Latvia's economy unconvincing.

BAILEY

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