Latvian inflation falls as economy suffers

RIGA — Latvia's inflation in October decreased to an annual rate of 13.8 percent, the fifth straight month the indicator has fallen as economic growth is hurt by the global financial crisis, the statistics office announced Monday.

Despite the drop, Latvia continues to have the highest inflation in the 27-member European Union due to years of unrestrained growth. In 2006 the economy expanded 12.2 percent.

While the slowing pace of consumer-price growth will be welcome news to Latvians, figures released Friday showed gross domestic product sank 4.2 percent in the third quarter of the year.

In one year the Baltic state has gone from being the EU's fastest growing country to one of the bloc's most troubled economies.

The government announced Saturday it would nationalize the country's second-largest financial institution — Parex Bank — after the bank ran into a liquidity crisis.

Prime Minister Ivars Godmanis has not ruled out that the country might appeal to international banking institutions such as the International Monetary Fund for a rescue package.

Latvia joined the EU in 2004.

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