Latvia’s annual inflation rate held steady at 3.2% in September 2026, driven higher by climbing transport and housing costs while a persistent, broad-based drop in grocery prices buffered consumers against sharper price spikes. Goods prices grew by 2.5% and services by 4.8% over the year. Compared to the 2025 average price level, consumer prices in September were 3.7% higher, with goods up 2.6% and services up 6.3%, while the 12-month average price level increased by 3.2% compared to the preceding 12 months.
The Transport and Energy Pressures Driving the Index
Transport emerged as the single largest contributor to the annual price level increase, heavily influenced by surging fuel prices, which jumped 35.3% year-on-year and added 1.6 percentage points to the overall index. Diesel prices rose by 39.1%, petrol increased by 29.5%, and auto gas rose by 3%. Within monthly figures, transport group prices increased by 2.1%, largely driven by a 9.6% jump in fuel prices, which included a 10.3% rise for diesel, 8.3% for petrol, and 1.8% for auto gas, alongside positive monthly impacts from passenger air and road transport reductions, computers, and medications, while personal care devices, strong alcoholic drinks and liqueurs, home furniture, and household cleaning and maintenance products dropped in price.
Housing, water, electricity, gas, and other fuels also exerted substantial pressure, seeing an average price increase of 7.3% over the year and adding 1.2 percentage points to the annual increase. Thermal energy experienced the steepest annual surge at 9.1%. On a monthly basis, electricity contributed the most to group increases with a 3.0% rise, alongside a 1.6% increase for solid fuel and 0.3% for thermal energy, while housing rental fees decreased by 0.9%. Recreation, sport, and culture added 0.5 percentage points to the annual increase.
How Falling Food Prices Contributed to Deflationary Relief
Offsetting the energy shocks, grocery aisles provided remarkable relief for household budgets. Food and non-alcoholic beverage prices dropped by 4.8% over the year, exerting a downward impact of 1.1 percentage points on the overall price level.
Additional relief came from declines in fresh poultry (-7.4%), pork (-7.0%), eggs (-9.6%), cheese (-4.8%), coffee (-7.3%), and chocolate (-8.3%). Further price reductions touched meat products (-5.3%), plant oils (-19.8%), fresh stone fruit and pome fruit (-23.1%), yogurt and similar products (-5.2%), other fresh fruit (-19.9%), fruit and vegetable juices (-9.9%), potatoes (-12.7%), and fresh citrus fruit (-15.1%), as well as skimmed milk (-17.2%), butter (-24.6%), and bread (-5.7%). Conversely, fresh or chilled fruit vegetables increased by 9.1%, dried, salted, or smoked fish by 32.6%, and other flour confectionery products by 3.1%.
However, economists warn that global commodity trends tell a contrasting story.
Economic Forecasts and the Path Toward 4% Inflation
Meanwhile, the Ministry of Economics (Ekonomikas ministrija) emphasized that geopolitical uncertainty and global commodity fluctuations will remain critical risk factors for Latvia’s economic trajectory, with average annual inflation expected to hover within the 3% to 4% range.
