In March, price dynamics were driven by a sharp rise in fuel and services prices, while lower electricity prices and still moderate food price dynamics partly restrained the overall increase in inflation.
According to the latest data published by the Central Statistical Bureau, in March 2026 the consumer price level rose by 1.9% compared with February. For goods it rose by 2.0% and for services by 1.8%.
In March, consumer prices traditionally rise more sharply than in other months of the year – by an average of 0.7-1.2%. This year too, the price fluctuations typical of the month were observed, yet the overall price increase in March was the sharpest since 2022, and before that a sharper rise occurred only in 1995. The largest impact came from the rise in fuel prices, driven by the sharp increase in oil prices on the world market amid geopolitical tension. Excluding the rise in fuel prices, the overall consumer price level would have risen by approximately 1%, which would correspond to the price dynamics typical of the month. A sharper price increase was also observed in the services sector, particularly in the package holiday and passenger air transport segments, and this was the sharpest monthly rise in services prices since the start of 2009. At the same time, pressure on prices was eased by very moderate food price dynamics – prices of food and non-alcoholic beverages recorded their most moderate March increase in the past five years.
Prices of goods included in the low-price basket fell by 0.1% overall on a monthly basis, as a sharper decline was restrained by price increases in the vegetables segment, for butter and for fresh berries. At the same time, compared with May 2025, they have fallen by 0.7%. Overall, food price dynamics indicate that the memorandum initiative continues to help ease pressure on food inflation. This is also confirmed by a comparison of the Baltic states – since the introduction of the memorandum in Latvia, the overall rise in consumer prices has been more moderate than in neighbouring countries, while prices of food and non-alcoholic beverages have actually fallen over this period. At the same time, food prices have risen substantially in Estonia and Lithuania, which points to lower price pressure in Latvia.
At the same time, in March the escalation of the military conflict in the Middle East already had a substantial effect on world energy markets, causing a sharp rise in oil prices and pushing up fuel prices in Latvia as well. This was directly reflected in consumer price dynamics, particularly in the transport component, and partly affected the prices of travel-related services too. Given that the pass-through of energy prices to other groups of goods and services usually occurs with a time lag, additional cost pressure is expected in the coming months in the transport, logistics and energy-intensive sectors. If energy prices remain high, this may in turn drive price increases across a wider range of goods and services, raising the overall level of inflation and restraining growth in household purchasing power in the short term.
In the goods sector, the largest upward impact in March came from the rise in fuel prices – by 21%, which pushed the overall consumer price level up by 0.9 percentage points. The largest impact came from the increase in diesel prices.
On the world oil market, prices rose sharply in March and remained highly volatile. The price of Brent crude rose by approximately 42% over the month overall, reaching its highest level since 2022. Price dynamics were mainly driven by the escalation of the military conflict in the Middle East, which substantially disrupted supplies and restricted the flow of oil through the Strait of Hormuz – one of the most important global oil transport routes. At the start of the month, prices rose sharply in response to attacks on energy infrastructure and reduced oil output in several countries in the region. Concerns about substantial supply disruptions intensified on the market, as tanker traffic was restricted and the volume of exported oil declined. In the middle of the month, prices exceeded 110 US dollars per barrel, reflecting high geopolitical risks and market expectations of more prolonged supply disruptions. At the same time, the price rise was partly restrained by international measures to stabilise the market, including the use of strategic oil reserves and signals of a possible easing of sanctions in order to maintain supplies. At the end of the month, as hopes of a de-escalation of the conflict emerged, prices retreated slightly from their daily highs, yet remained at a very high level.
This March too, as in other years after the end of the winter sales, prices of clothing and footwear rose substantially – by 5.7%, which pushed the overall consumer price level up by 0.3 percentage points. At the same time, it should be noted that this March's rise in clothing and footwear prices was the lowest since 2012.
Owing to the excise duty increase in force since 1 March 2025, prices of alcoholic beverages and tobacco products rose by 3.4%, which pushed the overall consumer price level up by 0.2 percentage points. The largest impact came from price rises for spirits and wine, with cigarette prices also increasing substantially.
As promotions came to an end, prices of articles and products for personal care also rose in March, by 3.1%, which pushed the overall consumer price level up by 0.1 percentage point.
Prices of food and non-alcoholic beverages were practically unchanged in March – an increase of 0.1%, which had a minimal effect on the overall consumer price level. The largest upward impact came from price rises for meat products, vegetables and butter. The most significant downward impact came from price falls for cheese, pork, bread and flour confectionery, as well as coffee.
World food prices continued to rise in March for the second month in a row – by 2.4% – and were 1.0% higher than a year earlier. The overall price increase was driven by rises across all the main product groups, which, in addition to market fundamentals, were also fuelled by higher energy prices linked to the escalation of the conflict in the Middle East. The sharpest rises in March were in sugar and vegetable oil prices, mainly driven by higher oil prices, which increased demand for bioethanol and biofuel production. Additional pressure was also created by concerns about possible trade disruptions and supply constraints in individual regions, including the Black Sea region, while the rise in sugar prices was partly restrained by good global supply prospects. Cereal prices rose in March, mainly because of the increase in wheat prices, driven by drought risks in the USA and an expected reduction in sowings in Australia. The rise in meat prices was mainly driven by higher pork prices due to seasonally stronger demand in Europe, as well as by rising beef prices amid limited supply, while sheep meat and poultry prices remained stable or declined. Dairy prices rose in March for the first time since the summer of 2025, mainly because of higher prices for milk powders and butter, supported by steady demand and seasonally lower supply, while cheese prices continued to fall amid greater supply and weaker demand in Europe.
The largest downward impact in March came from the fall in prices of housing-related energy, which lowered the overall consumer price level by 0.2 percentage points. The largest impact came from the fall in electricity prices – by 5.4%. This was driven by the fall in exchange prices, which reduced tariffs linked to electricity prices. The price fall was helped by increased generation from wind, solar and hydroelectric power plants, as well as by a seasonal decline in electricity consumption as air temperatures and the number of daylight hours increased. Prices of solid fuels fell very moderately – by 0.6% – natural gas prices were unchanged, while heat energy prices rose by 0.2%.
Services prices rose by 1.8% overall in March, which pushed the overall price level up by 0.6 percentage points. The largest upward impact came from the rise in package holiday prices, mainly driven by growing demand during the spring holidays and the travel season. The increase in passenger air transport prices also had a substantial impact, fuelled by higher demand and seasonal price fluctuations. Part of the price rise may also have been influenced by the increase in fuel prices, although its fuller effect on services prices usually manifests with a time lag. Overall, the rise in services prices in March was driven by more active travel and leisure activity.
In other groups of goods and services, price fluctuations over the past month did not have a substantial effect on the overall price level.
In March 2026, consumer prices rose by 3.4% compared with March of the previous year. Average annual inflation was 3.6%.
Going forward, price changes in Latvia will largely be determined by fluctuations in energy and food prices on global markets, as well as by geopolitical developments and the pace of world economic growth. The level of inflation in Latvia will be further affected by supply-side factors – the revision of taxes and regulated tariffs – as well as by the demand side, fuelled by wage growth. Given the latest trends on energy markets and the uncertainty linked to the Middle East conflict, average annual inflation in Latvia in 2026 may be higher than previously forecast and exceed the 3.5% mark.