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EASTERN EUROPE SUFFERS FROM ITS OWN SUCCESS

Economic growth soars - and now food and energy costs do, too.

Artur Arushanov dreads shopping these days. A truck driver and father of three, he can't bear to watch how food prices in Latvia are climbing relentlessly, with inflation raging at almost 16 percent annually.

"I wanted to buy my daughter granola cereal, but I can't afford it anymore," said Arushanov, 41. "I now spend about 60 percent of my income just on food, so I really have to think about what I buy."

Not just in Latvia, but across Eastern Europe, inflation has descended like a nasty winter virus in the newest EU member countries, hurting household budgets and causing countries to see their long-term goal of joining the euro slip farther into the future as governments struggle to get prices under control.

Economies across the globe are grappling with inflation, thanks to costlier energy and food, but prices in Eastern Europe are soaring on a wave of economic growth as the former communist countries that joined the EU in 2004 and 2007 race to catch up with richer Western European nations.

Natalya Kiselyeva, 40, a Riga public school chemistry teacher, moonlights at a private school to afford Latvia's food prices, which have soared 20 percent over the past 12 months.

"I don't even bother trying to save money," she said. "It's practically losing value by the week."

The average monthly wage in Latvia was 400 lats ($835) as of September, the latest figures available. And with a liter of milk at 0.56 lat ($1.17), consumers are feeling the pinch. Last year, cheese prices jumped 44 percent, according to official statistics, and a survey found bread prices soared 30 percent over three months.

Growth plays a role since increased economic activity means more demand for goods and raw materials. In 2006, Latvia's GDP grew 11.9 percent and Estonia's 11.4 percent - the two best results in the EU. So in 2007, the two countries' price indexes jumped 14.1 percent and 11 percent.

Lithuania, Latvia and Estonia, EU members since 2004, got into what is called ERM-II, the union's official two-year waiting room for euro hopefuls - but have had to postpone the long-cherished dream because the inflation shows they do not have their economic houses in order.

Ministers say 2012 will be the earliest common currency will appear in the three Baltic countries. To get in, countries must meet strict standards for low deficits, debt and inflation; last year the "entry bar" on inflation was 3.4 percent.

In Bulgaria, which along with Romania joined the EU in 2007, prices ended the year up 12.5 percent, even though some Bulgarians think the government is keeping the data low to save face.

"I simply don't believe the official statistics. When I calculate my household's expenses for last year, I come up with an annual inflation of more than 20 percent," said Angel Kuzmanov, a 58-year-old technician.

In Cluj, 250 miles from the Romanian capital, teacher Dorina Pop, 55, said, "I cannot save anything, all my money goes on food, taxes and utilities. I will soon retire and I am horrified about what will happen to me."

Fast facts

Inflation rises

A look at annualized inflation rates for January in the EU's Eastern European nations:

Latvia: 15.8 percent

Bulgaria: 12.5 percent

Estonia: 11.0 percent

Lithuania: 9.9 percent

Czech Republic: 7.5 percent

Romania: 7.2 percent

Hungary: 7.1 percent

Poland: 4.3 percent

Slovakia: 3.8 percent

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