Translated using ChatGPT service.
In March 2025, compared to February, the consumer price level increased by 0.9%. The prices of goods rose by 0.7%, while the prices of services increased by 1.3%. In March, the consumer price level typically rises faster than in other months of the year, averaging an increase of 0.7-1.2%.
Analyzing data from the Central Statistical Bureau, it was observed that the price increase in March is usually driven by seasonal price hikes in clothing and footwear, as well as changes in excise tax rates. This year, typical monthly price fluctuations were observed in March, further intensified by a significant rise in food prices, which continue to be one of the main driving forces of overall price growth in Latvia. A sharper price increase was also observed in the services sector, and these two consumption groups had as much impact on the overall consumer price level as the increase in the prices of clothing and footwear.
The prices of food and non-alcoholic beverages increased by 1.3%, which raised the overall consumer price level by 0.4 percentage points. If we exclude the sharp price increase in March 2022 and 2023, the price rise in food in March 2025 was the fastest observed for this month since 1998, except for 2004, when it was identical to this year’s increase. The largest contributing factors to the price increase in March were the prices of fresh vegetables, chocolate, dried smoked and salted meats, fresh fruits, poultry, dairy products, and eggs.
Globally, food prices did not change in March compared to the previous month, but compared to March 2024, they rose by 6.9%. The decrease in the prices of cereals and sugar offset the price increases of meat and vegetable oils, while dairy product prices remained stable. The sharpest price decline was observed in cereals, mainly due to the price reduction of wheat, as concerns about harvest conditions in some major Northern Hemisphere exporting countries diminished. The drop in sugar prices, following an increase in the previous month, was influenced by weak global demand and recent rainfall after prolonged drought in the main sugarcane-growing areas in southern Brazil, alleviating concerns about a sugar supply shortage. The sharpest price increase in March was in the vegetable oil index, which rose for all major vegetable oil types. Palm oil prices increased for the second consecutive month due to insufficient supplies in the main producing countries in Southeast Asia. Despite weak demand from the U.S. biofuel sector, soybean oil prices remained competitive compared to other oils. Prices of rapeseed and sunflower oil rose as stocks in major exporters decreased, while global demand remained high. A more moderate price increase in March was seen in meat. Pork prices rose due to higher prices in the EU after Germany regained its status as a country free from foot-and-mouth disease, allowing the UK and other countries to lift import bans. Beef and lamb prices continued to rise due to strong demand, but poultry prices remained stable as supply and demand were balanced, despite avian influenza outbreaks in some major producing countries. Meanwhile, dairy product prices remained unchanged in March, with butter and milk powder prices increasing due to a decline in milk production in Oceania and strong demand, while cheese prices fell after nine months of continuous increases, driven by stable supply in Europe and weak demand in Oceania.
Also in March, as in other years after the winter sales, the prices of clothing and footwear increased significantly by 6.4%, which raised the overall consumer price level by 0.3 percentage points. It should be noted that this year’s March price increase for clothing and footwear was the lowest since 2012 (except for 2023, when it was the same as this year).
For services, prices rose by an average of 1.3% in March, contributing 0.3 percentage points to the overall price level. The largest contributing factor to the price increase in services in March was the rise in transportation services, mainly due to the increase in international flight prices. A significant price increase was also observed for vehicle technical inspections and television subscription fees.
From March 1, 2025, the excise tax increase on alcoholic beverages led to a price rise of 3.0% for alcoholic beverages and tobacco products, contributing 0.2 percentage points to the overall consumer price level. The largest impact came from the price increase for strong alcoholic beverages and beer. Significant price increases were also observed for cigarettes.
The largest price-reducing impact in March was due to a drop in energy resource prices. After increases in the previous three months, fuel prices sharply decreased by 4.2% in March, reducing the overall consumer price level by 0.3 percentage points. Prices for both diesel and gasoline decreased similarly.
The average monthly price of Brent crude oil in March, compared to February, fell by about 4.7%, marking the sharpest monthly drop since September 2024. However, by the end of March, the Brent oil price had increased by 2% compared to the end of February. During most of the month, it remained at the level of $69–71 per barrel, but by the end of the month, it increased to $74 per barrel due to concerns about a global supply shortage. The U.S. threats to impose 25% tariffs on Venezuelan oil buyers disrupted trade flows, particularly to China and India, the largest importers of Venezuelan oil. This was also exacerbated by U.S. presidential threats of 25–50% tariffs on buyers of Russian oil if Moscow obstructed his efforts to end the war in Ukraine, as well as additional tariffs and military strikes on Iran if it failed to reach an agreement with the U.S. on its nuclear program. U.S. crude oil inventories also decreased, indicating high demand. Meanwhile, markets assessed the upcoming U.S. tariff increases scheduled for April 2, 2025, which heightened concerns about a global trade war that could hinder economic growth and reduce energy demand. Price pressures were also influenced by OPEC+ plans for a gradual increase in oil production from April, possibly continuing into May.
In March, electricity prices also decreased by 3.9%, which reduced the overall consumer price level by 0.1 percentage points. This was due to a drop in prices on the exchange, reducing tariffs linked to electricity exchange prices. The price decrease was mainly influenced by increased production of renewable energy resources—higher wind, solar, and hydroelectric power generation—and milder weather, which reduced the overall electricity consumption in the Baltic region. Meanwhile, the prices of natural gas and solid fuels remained virtually unchanged, while heating energy prices rose slightly by 0.6%.
In March 2025, compared to March of the previous year, consumer prices increased by 3.3%. The average annual inflation for the year was 1.9%.
In the future, significant impacts on price changes will come from global price fluctuations, as well as global developments, particularly the geopolitical situation. At the same time, domestic factors in Latvia, such as new tax changes, will also play a significant role, both on the supply side, due to tax and tariff increases, and on the demand side, as post-tax wages rise, increasing consumers' purchasing power. In 2025, the average annual inflation will be higher than that observed in 2024, reaching approximately 3%.