Low Latvian inflation boosts eurozone bid

RIGA: Inflation in Latvia stood at 0.3 percent in February on a 12-month basis according to data released Friday, boosting the Baltic state's bid to join the troubled eurozone next year.

January's equivalent figure was 0.6 percent.

Statistics Latvia partly explained the low inflation level was an 11.3 percent drop in "telecommunication devices" and a 6.6 percent decline in telecommunication service costs.

In February compared to January, the average consumer price level decreased by 0.1 percent.

Riga insists it already meets eurozone rules on inflation, debt and deficit levels and that its economy has stabilised after years of see-sawing macroeconomic data.

With its national currency, the lat, already on a fixed peg to the euro, Riga says it is unfazed by the eurozone's ongoing debt crisis and believes the currency switch could boost exports and improve market efficiency.

Average annual inflation for the previous 12-months was 1.8 percent in February, down from the equivalent figure of 2.0 percent in January.

This indicator is a key measure used to assess a country's eligibility for eurozone entry under the EU's Maastricht Treaty criteria.

The Latvian parliament approved a euro changeover plan on January 31, then on March 5, Latvia applied to the European Commission for an assessment of its readiness to replace the lat with the euro from January 1, 2014.

The European Commission is expected to give its verdict in June with a final decision on whether Latvia will be allowed to adopt the euro expected in July.

If Latvia wins the Commission's approval as expected, the former Soviet republic of two million will become the 18th member of the single currency.

Latvia joined the European Union in 2004.