Flash comment: Lithuania - September 8, 2017
Annual inflation accelerates to 4.4% in August
In monthly terms, consumer prices remained stable, however, annual inflation surged to 4.4% in August. Meanwhile, the average annual inflation picked up to 2.6%. The effect of increased excise duties on alcohol is still observed, however the effect of higher oil prices has diminished. Growth in prices of alcoholic beverages, dairy products and fuel prices contributed the most to annual inflation this month. Annual growth in the prices of goods accelerated to 3.8%, while that of services reached 6%, driven largely by rapid wage growth and strong demand.

Price growth continues to be strong

Annual consumer price growth has reached its peak now and is expected to recede gradually in the second half of this year, resulting in an average annual inflation of 3.5% for 2017. We expect the inflation to be primarily driven by rising prices of services that will continue to be fueled by rapid wage growth. Growth in the prices of goods is expected to ease due to appreciating euro and relatively stable commodity prices. We expect annual inflation to ease to 3% and 2.5% in 2018 and 2019, respectively.

For more information about this report, please contact Mr. Vytenis Šimkus, +370 5 258 2275, vytenis.simkus@swedbank.lt

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