Latvian inflation at 13.2%

Central Statistic Bureau reports that inflation reached 13.2%/year in October 2007. In comparison, it was 10.1%/year in August and 8.2%/year in May. It looks like we're in a nasty inflationary spiral.

This is beating the worst expectations. A few months ago, then-still-a-minister Aigars Štokenbergs predicted that the inflation will reach 14-15%/year by the end of 2007. I didn't believe him back then but now... the reality may be even worse by December.

The trend is similar across many Eastern European countries. Estonia has inflation of 8.5%/year now, up from 5.7%/year in August. The Latvian numbers are, however, one of the worst... and I've no idea when this spiral will end.

UPDATE (a few hours later): Parex Asset Management is trying to calm the people by pointing out that the usual beginning-of-heating-season increase in heating costs came one month early this year. As a result, October's yearly inflation numbers include two once-a-year heating price increases, one from November 2006 and another from October 2007. Good point, but even adjusting for that only decreases 13.2%/year to 12.7%/year.

And, if today's dinner bill is an indication, the inflation has not made my friends to spend less. Quite the contrary.