Flash comment: Lithuania - March 8, 2016
Annual inflation at 0.9% in February, more price pressures ahead

In February consumer prices were 0.3% lower compared with January and 0.9% higher than a year ago. Average annual deflation declined to 0.5%.

In a month prices decreased mostly due to seasonal sales of cloths and footwear. Annual deflation was mainly caused by cheaper fuel, heating, meat, dairy and eggs.

Outlook: wage growth and oil will push up prices

This could the last monthly deflation this year – excise duties on tobacco and alcohol have increased since 1st of March, oil prices are up by more than one third from January lows (and are likely to increase further in a medium term) and foodstuffs are unlikely to get any cheaper. Producer price deflation in Lithuanian market already eased significantly in January. Moreover, rapidly rising wages and 17% hike in minimum wage this year will further push up prices of many services. We expect average annual inflation to accelerate towards 2% by the end of this year.

For more information about this report, please contact Ms. Vaiva Šečkutė, +370 5 258 2156, Vaiva.Seckute@swedbank.lt

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