Riga - There was mixed news on the Latvian economy Monday with official statistics recording a month-on-month rise in the consumer price index (CPI) inflation figures but a continuing downward trend year-on-year.

The Latvian Central Statistical Bureau said that compared to September 2008 inflation for October 2008 rose by 1.2 per cent to stand at 13.8 per cent year-on-year.

In September, Latvian annual inflation was 14.9 percent.

Big rises in the prices of gas, up 68.9 per cent and heating, up 16.5 per cent, offset falls in prices for foodstuffs and consumer goods as domestic demand dried up in the wake of an economic downturn.

There was similarly mixed news on foreign trade with figures for September also released on Monday. Total foreign trade turnover in September reached 1.11 billion lats (2 billion dollars), 16.7 per cent more than a month before but 12.7 per cent less than in September 2007.

Nordea Markets analyst Andris Laurins told Deutsche Presse-Agentur dpa the trade balance figures were "worrying" but was more optimistic about inflation.

"If you take off fixed prices such as gas and housing, then actually we would have really low monthly inflation. These two things are holding the rate up," he said.

But for items such as clothing and shoes, prices remain artificially high, Laurins said, adding that greater competition was needed in the marketplace.

Danske Bank's senior Baltic analyst Violeta Klyviene told dpa the inflation figures were "more or less in line with what we had expected" but predicted that inflation would jump when heating demand really takes off during the cold Baltic winter.

"The heating season has only just started and we have had quite good weather, so we will see acceleration in coming months," she predicted. (dpa)