Flash comment: Lithuania - December 8, 2017
Inflation lingers at 4.4% annually
Annual inflation has not changed from October to November and was at 4.4%. Prices grew 0.3% month over month in November. Meanwhile, average annual inflation reached 3.5%.


Prices of goods in annual terms grew 4%, while services price growth eased somewhat to 5.5% down from 5.7%, which was partially due to dissipating effect of minimum monthly wage increases.


As previously a very significant part of inflation was due to commodities or policy changes. 1.1pp of inflation can be attributed to commodities – oil and dairy products, while 0.7pp is attributable to specifically beer and spirits taxation. The total spread between headline and core (w/o energy, food, alcohol &tobacco) was 1.4pp in November. Fortunately drinking and driving was more expensive this year.


Price growth is fuelled by taxes and commodities
Preliminary HCPI indicated that price growth should have eased to 4.2% annually, but this was not the case. None the less, we still foresee price growth easing next year down to around 3.3%. Of course a risk of sharp swings in commodity prices is present, but at least Domestic pressures are easing.

 


For more information about this report, please contact Mr. Vytenis Šimkus, +370 5 258 5163, vytenis.simkus@swedbank.lt

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