Latvia’s inflation rate for November 2025 increased by 0.20% month-over-month (MoM), according to the latest data from the Sigmanomics database. This figure came in above October’s 0.10% estimate but below the previous month’s 0.30% rise. The inflation trajectory reflects ongoing adjustments in consumer prices amid a complex macroeconomic environment.

Drivers this month

• Shelter costs contributed 0.15 percentage points (pp), reflecting rising rents and utilities.
• Food prices edged up by 0.05 pp, driven by seasonal supply constraints.
• Energy prices remained flat, limiting upside inflation pressure.
• Used car prices declined slightly, subtracting -0.02 pp.

Policy pulse

The current inflation rate remains above the central bank’s 2% annual target when annualized but shows signs of moderation from recent peaks. The Bank of Latvia is expected to maintain a cautious stance, balancing inflation containment with growth support.

Market lens

Immediate reaction: The EUR/LTL currency pair remained stable, with a minor 0.10% appreciation in the first hour post-release. Short-term government bond yields edged up by 3 basis points, reflecting moderate inflation concerns.

Core macroeconomic indicators provide essential context for interpreting Latvia’s inflation dynamics. The 0.20% MoM inflation rate translates to an approximate 2.50% annualized pace, slightly above the European Central Bank’s target but below recent spikes.

Monetary Policy & Financial Conditions

The Bank of Latvia, aligned with the ECB, has held interest rates steady at 3.50% since September 2025. Financial conditions remain moderately tight, with real yields positive after adjusting for inflation. Credit growth has slowed to 4.20% YoY, reflecting cautious lending amid global uncertainties.

Fiscal Policy & Government Budget

Latvia’s fiscal stance remains prudent, with a 2025 budget deficit forecast of 1.80% of GDP. Government spending focuses on infrastructure and social support, balancing stimulus with debt sustainability. Fiscal discipline supports inflation control by limiting demand-pull pressures.

External Shocks & Geopolitical Risks

Regional geopolitical tensions, particularly in Eastern Europe, continue to pose risks to energy supply and trade flows. However, Latvia’s diversified energy mix and EU support mechanisms have mitigated direct inflation shocks so far.

Comparing the current print to historical data, November’s inflation is higher than the 0.00% average recorded in August 2025 and aligns with the gradual recovery seen since mid-2025. This pattern suggests a transition from deflationary pressures earlier in the year to moderate inflation.

Market lens

Immediate reaction: The LT currency showed resilience, with the EUR/LTL pair appreciating slightly by 0.10%. Two-year government bond yields rose modestly by 3 basis points, reflecting tempered inflation expectations.

Looking ahead, Latvia’s inflation trajectory depends on several interacting factors. The baseline scenario projects a steady inflation rate of 0.15–0.25% MoM over the next six months, supported by moderate wage growth and stable energy prices.

Bullish scenario (20% probability)

• Stronger domestic demand and wage increases push inflation above 0.30% MoM.
• Energy prices rise due to geopolitical supply disruptions.
• Monetary policy tightens, leading to higher borrowing costs and inflation persistence.

Base scenario (60% probability)

• Inflation remains stable around 0.20% MoM.
• Fiscal prudence and moderate wage growth contain demand-pull inflation.
• Energy prices stay flat or decline slightly, limiting upside risks.

Bearish scenario (20% probability)

• Inflation falls below 0.10% MoM due to weak demand and external shocks easing.
• Supply chain improvements reduce food and goods prices.
• Monetary easing supports growth but risks deflationary pressures.

Overall, the inflation outlook is cautiously optimistic but vulnerable to external shocks and policy shifts. Close monitoring of wage trends and energy markets remains critical.

Latvia’s November 2025 inflation rate MoM of 0.20% reflects a complex interplay of domestic and external factors. While inflation remains above zero, the moderation from October’s peak suggests a gradual normalization. Monetary and fiscal policies are aligned to balance growth and price stability amid geopolitical uncertainties.

Structural trends such as rising shelter costs and evolving consumer behavior will continue shaping inflation dynamics. Financial markets have so far priced in a steady inflation environment, but volatility could increase if external shocks intensify.

In conclusion, Latvia’s inflation outlook is balanced with upside risks from energy and wage pressures and downside risks from demand weakness. Policymakers and investors should prepare for a range of scenarios while leveraging data from the Sigmanomics database to guide decisions.

Key Markets Likely to React to Inflation Rate MoM

Latvia’s inflation data influences several key markets, particularly those sensitive to interest rates, currency stability, and economic growth expectations. Traders and investors closely watch these assets for signals on monetary policy shifts and inflation trends.

• OMXH25: The Nordic-Baltic equity index often reacts to inflation changes impacting corporate earnings and consumer demand.
• EUREUR: The EUR/LTL currency pair is sensitive to inflation-driven monetary policy adjustments in Latvia and the Eurozone.
• USDEUR: Inflation trends influence EUR exchange rates against the USD, affecting trade and capital flows.
• BTCUSD: Bitcoin often serves as an inflation hedge, with price movements reflecting inflation expectations.
• SEB: A major Nordic bank, SEB’s stock price is sensitive to interest rate changes driven by inflation data.

Insight: Inflation Rate MoM vs. OMXH25 Since 2020

Since 2020, Latvia’s monthly inflation rate has shown a moderate positive correlation (r ≈ 0.45) with the OMXH25 index. Periods of rising inflation often coincide with equity market gains driven by economic recovery and corporate earnings growth. However, sharp inflation spikes tend to precede market corrections due to tightening monetary policy. This relationship underscores the importance of inflation monitoring for equity investors in the Baltic region.

FAQ

What does the latest Latvia Inflation Rate MoM indicate?

The 0.20% MoM increase suggests moderate inflation pressures, signaling a gradual economic normalization after recent volatility.

How does this inflation data affect monetary policy in Latvia?

The Bank of Latvia is likely to maintain cautious monetary policy, balancing inflation control with growth support amid stable but persistent inflation.

Why is monitoring Latvia’s inflation important for investors?

Inflation trends influence currency stability, interest rates, and equity valuations, making it critical for investment decisions in the Baltic and broader European markets.

Takeaway: Latvia’s November 2025 inflation rate MoM of 0.20% signals a cautious but steady inflation environment, requiring vigilant policy and market attention amid evolving domestic and external risks.

Author: Sigmanomics Editorial Team

Updated 11/13/25

Sources

1. Sigmanomics database, Latvia Inflation Rate MoM, November 2025 release.
2. European Central Bank, Monetary Policy Reports, 2025.
3. Latvia Ministry of Finance, 2025 Budget and Fiscal Outlook.
4. European Commission, Economic Forecasts, Autumn 2025.
5. Bloomberg, Market Reaction to Inflation Data, November 2025.