Flash comment: Lithuania - February 14, 2017
Consumer prices on a rise. More to come

In January consumer prices increased by 0.3% compared with December and were 2.3% higher than a year ago. Most of the increase was due to more expensive food products and alcoholic beverages, but housing costs and most of the services were also more expensive and contributed to higher inflation. A big seasonal drop in price of clothes and footwear didn’t help much – annual inflation is at the highest level in four years.

And there is more to come. In March excise duties on tobacco and alcohol will be increased, while transportation and fuel costs throughout this year will be pushed upwards by more expensive oil. Prices of most other industrial and agricultural commodities is also not on the consumers’ side – the era of stagnating or falling prices is behind us. Robust wage growth, which is expected to ease only marginally this year to 6.5%, is also pushing up the prices of most services. Annual growth of price of services increased to 2.9% in January, but we forecast average annual growth to reach 4% this year and remain at the same level in 2018. We forecast average annual growth of prices of goods to reach 2.7% this year before easing somewhat next year.

For more information about this report, please contact Mr. Nerijus Mačiulis, +370 5 258 2237, Nerijus.Maciulis@swedbank.lt
This letter is distributed by Swedbank in cooperation with Brightly. The letter is personal.