Flash comment: Lithuania - July 11, 2016
Positive average annual inflation in June

In June consumer prices increased by 0.1% compared with May and were 0.7% higher than a year ago. Average annual inflation was at 0.1% and was positive for the first time since 2014.

In a month prices of goods decreased by 0.2%, while prices of services rose by 1.2%. Higher prices of transport had the highest positive effect on monthly inflation due to more expensive fuels and transport services. Compared with a year ago prices of goods were still 0.5% lower as prices of fuels remained 15.6% lower than a year ago, while prices of services were 4.3% higher.

Outlook: faster price growth for the rest of the year

Even though oil price most likely will not rise above the June level this year, the effect of lower oil prices will continue to fade away somewhat because of the lower base effect. Accelerating wage growth and a 17% hike in minimum wage will continue to drive service price growth this year. Average annual inflation is expected to be slightly above 1.5% this year and continue increasing next year.

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

This letter is distributed by Swedbank in cooperation with Brightly. The letter is personal.