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Cablegate: Latvian Inflation Up to 13.2%

VZCZCXRO6084
PP RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHRA #0852 3181554
ZNR UUUUU ZZH
P 141554Z NOV 07
FM AMEMBASSY RIGA
TO RUEHC/SECSTATE WASHDC PRIORITY 4524
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS RIGA 000852

SIPDIS

STATE FOR HR/OE AND EUR/NB
STATE FOR EUR-IO/EX/PMO - C STACHOWITZ

SIPDIS

E.O. 12958: N/A
TAGS: ECON AFSN AMGT ELAB LG
SUBJECT: LATVIAN INFLATION UP TO 13.2%

1. According to figures released on November 8 by the Latvian
Central Statistical Bureau (CSB), the annual inflation rate in
Latvia hit 13.2% in October. This marks the highest rate in Latvia
since 1996, and consumer prices are widely expected to continue
rising until mid 2008. Increases in utility service costs (which
include heating and electricity) and food prices were by far the
largest contributors to the inflation rate, accounting for 70% of
the observed inflation.

2. Comment: The rise in food prices, which have increased over 17%
on an annual basis, has gained special attention in the press and
has become a factor in wage demands. One recent article from a
Nordea Bank commentator lamented that local food prices appear to
have surpassed US prices, in spite of Latvia's lower income levels.
Though Latvian wages have increased greatly in recent years, average
incomes are still only about a quarter of those in the US (roughly
$40,123 annually in the US as of June 2006, versus $10,525 in
Latvia).

BAILEY

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