Food prices in Latvian shops are starting to follow global trends, Bank of Latvia President Mārtiņš Kazāks said in an interview with commercial television channel TV3 on Wednesday.
He noted that in previous years Latvia had seen a tendency whereby food prices rose in line with global increases but did not fall when prices declined internationally.
“It now appears that prices are gradually beginning to follow global trends – if they are falling globally, they are also falling here,” Kazāks said.
He also welcomed the introduction of a low-price basket in the Latvian retail sector.
Kazāks pointed out that the Bank of Latvia can influence food price increases in only one way – by raising interest rates – but stressed that this would not be the right solution in the current situation.
“Monetary policy can address price increases only by raising interest rates, but trying to solve structural problems in a single sector in this way, while pushing the rest of the economy into recession, would be the wrong remedy. Therefore, monetary policy cannot resolve food price hikes,” Kazāks said, adding that the Bank of Latvia’s role in this issue is primarily that of an economic expert.
He also emphasized that consumers themselves play a very important role in addressing food prices by “voting with their wallets” when making purchasing decisions.
Source: BNS
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