Inflation in Latvia continued to soar in August, reaching an annual rate of 10.1 percent, the Baltic state's statistics agency said Monday.

Consumer prices have risen steadily over several months to reach the double-digit mark, which represents the highest inflation rate of the 27-member European Union.

The inflationary rate is the highest in Latvia for more than a decade and points to troubles for the center-right government, which had forecast 2007 inflation at approximately 6.5 percent.

Latvia continues to be the EU's fastest growing economy with GDP expanding 11.1 percent in the first half of the year. Last year's GDP growth amounted to 11.9 percent.

Earlier this year the government implemented an anti-inflation plan, though some of the crucial aspects - curtailing easily available housing loans and taxing capital gains on real estate transactions - did not go into effect until July.

Consumer prices rose 0.4 percent in the month of August, fueled by gains in tobacco and food, the statistics agency said.