(RIGA) - Latvian 12-month inflation dipped in June to 17.7 percent on a 12-month basis after having hit a 12-year high of 17.9 percent in May, offering consumers in the Baltic state a glimmer of hope, official data showed on Tuesday.

Compared with the May level, prices in June jumped 0.7 percent, the figures from the national statistics office showed.

The fall in 12-month inflation was the first following more than a year of constant increases in Latvia, which is one of the former communist "tiger" economies in the European Union.

Inflation has been driven notably by increased costs of food and vehicle fuel.

Latvia's 12-month inflation in April was 17.5 percent after 16.8 percent in March, 16.7 percent in February, 15.8 percent in January and 14.1 percent in December.

Latvia, which broke free from the crumbling Soviet Union in 1991, has had problems keeping inflation under control amid robust economic growth, largely fuelled by domestic consumption, notably since the country of 2.3 million people joined the EU in 2004.

The economy has slowed sharply in recent months as demand finally falls off in the face of rising prices and confidence is dented by global economic turbulence.

In the first quarter of this year, growth slowed to 3.3 percent from 8.0 percent in the final quarter of 2007.

The economy had expanded 11.2 percent in the third quarter of 2007, 11.0 percent in the second and 10.9 percent in the first three months.

For all of 2007, the economy grew 10.2 percent, one of the highest rates in the world, after 11.9 percent in 2006, which was the fastest pace since independence heralded a market economy.

Latvia has the highest inflation in the 27-nation EU.

Latvia's Baltic neighbours Estonia and Lithuania are also grappling with high inflation -- Estonia recorded 11.4 percent in June, while Lithuania, which is due to release its June data on Wednesday, logged 12.0 percent in May.

Early last year, the Latvian government launched a plan to slash inflation, largely by dampening consumption through measures including restricting personal loans and mortgages.

Latvian authorities have said the plan is likely to bear fruit only in the second half of this year, forecasting that inflation will fall over coming months to about 10-11 percent.

Latvia's annual average inflation, which is a key yardstick for countries seeking to adopt the euro, was 14.6 percent in June.

Curbing inflation is a key requirement for countries that want to join the 15 members of the EU that use the European single currency.

Latvia and other EU members that are not in the eurozone are bound to reduce inflation to close to the lowest rates in the EU as part of their convergence programmes for adopting the currency.

A country seeking to join the eurozone must meet several conditions, one being inflation no higher than the average of the three lowest inflation figures in the 27 EU countries plus 1.5 points, a figure currently standing at 3.2 percent.

Latvia's failure to keep inflation below the limit foiled its attempt to switch from the national currency, the lat, to the euro from the beginning of this year.

Latvian authorities have said the country may now not be ready to adopt the euro before 2011-2012 and even as late as 2013.

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