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Prices Have Risen in European Latvia

As "Vremya Novostey" writes, food, medicines, utilities and, of course, fuel have become more expensive. Therefore, the ranks of optimists are melting: in February there were 37.5%, and in March already 30.4%, while the share of skeptics over the same period grew from 18.1% to 18.6%.

Among optimists, young people, people with higher education, Latvians, and also those who cannot be classified as poor traditionally predominate. Pessimism is common among the elderly, people with secondary education, and also those residents for whom Latvian is not their native language.

"The main thing is that everything happened as predicted, without big surprises," believes Raita Karnite, director of the Institute of Economics of the Latvian Academy of Sciences. She believes that one of the main reasons for the rise in prices is not EU accession, but an avalanche-like increase in fuel prices around the world. "Another reason why prices went up is indeed to some extent due to the state's EU membership. A lot of money came to Latvia in the form of European financing and investments. The market responded to the inflow of funds and the population's willingness to spend with higher prices," the Latvian economist believes. In addition, since May 1, 2004, according to EU requirements, the excise tax on fuel has been raised in Latvia - as a result, fuel prices rose by 22.6% over the year.

Since May 1, 2004, new rates of the so-called "indirect" taxes regulated by Brussels (value added tax, excise tax) began to be applied in Latvia to a range of goods, including medicines. At the same time, the Latvian market was closed to medicines produced outside the EU and without the European GMP quality certificate. As a result, medicines rose in price by 17.5%.

On the eve of the country's accession to the EU, the Latvian Center for Agricultural Assistance predicted that in three years the increase in food prices would be from 30% to 50%. Over 2004, food products rose in price by 10%. Particularly sharp increases were seen in prices for dairy products, bread, confectionery, meat, and fish.

As positive aspects of European integration, Karnite cited the opportunity for Latvian residents to find work throughout the EU. "Maybe this is not very good for the country as a whole, but it is good for the ordinary person. Latvian employers sooner or later will have to react to the outflow of labor to other EU countries. And there is only one way to influence here - to raise wages."