Small businesses in Latvia most concerned about rising costs and inflation
A survey shows that 35% of Latvian small business owners consider inflation and rising operating costs as the biggest risk by the end of the year, followed by energy and fuel price increases.
According to a survey conducted by Luminor Bank, more than a third of Latvian small business owners see inflation and rising operating costs as the greatest threat to their revenues by the end of the year. This factor was mentioned by 35% of respondents. Almost as many – nearly one-third – pointed to the impact of energy and fuel prices.
Changes in customer behavior, including shifts in consumption patterns and demand, were cited as a risk by 27% of those surveyed. Labor cost increases, including wages and staff shortages, concern fewer than one-fifth of respondents. Meanwhile, almost a quarter of entrepreneurs emphasized the geopolitical situation as a significant risk.
Uģis Počs, head of the Small and Medium Enterprise Department at Luminor, explains that although inflation indicators have stabilized recently, companies still feel the effects of the previous price shock – higher raw material, energy, logistics, and labor costs. He notes that inflation is not seen as a short-term episode but as a longer-term challenge. Fuel prices are particularly significant; in April they were 8.7% higher than in March, and while they have retreated from their peak, further increases cannot be ruled out.
Geopolitical risks directly affect energy and fuel markets, causing volatility that raises transport and logistics costs. Entrepreneurs do not view this risk as a distant foreign policy issue but as a practical cost risk.
One in ten respondents (10%) are worried about tax or regulatory changes. In Estonia and Lithuania, this share is higher – 16% and 19%, respectively. Across the Baltics, Estonian business owners are most concerned about cost increases (42%), while in Lithuania the main risks are inflation and energy prices (30% each). Počs adds that entrepreneurs' concerns stem from a general sense of uncertainty, and stability is especially important for small businesses, as even minor changes can affect cash flow and investments.
