Flash comment: Lithuania - November 9, 2018
Higher oil prices boost inflation

Annual inflation accelerated to 2.9% in October compared to 2.4% in September. On a monthly basis prices grew by 0.6%. Core inflation excluding food, energy, alcohol and tobacco accelerated to 1.9% up from 1.8%.

The main factor determining price dynamics was an increase in global oil and energy prices. Automotive fuel and solid fuels together contributed 1.45 p.p. to annual inflation. In annual terms, price of fuel increased by 16.7% in October. Price of Brent was 22% higher at the end of October, compared to same period last year. However, the oil price has started to decline.

Overall, annual growth in prices of consumer goods stood at 2.5%, while that of consumer services picked up to 4.1% - mainly a reflection of rapidly increasing wages and the oil price. Average annual inflation continued its steady decline and stood at 3.0%.

Slightly lower inflation is expected in the future

Price growth is set to fluctuate around a similar level in the near future. We expect average annual inflation to ease to 2.7% this year and remain at the same level throughout 2019. Price growth in consumer goods is likely to remain modest in the future, while services inflation will remain elevated to due rapidly rising labour costs.

For more information about this report, please contact:

 Vytenis Šimkus, +370 687 17870, vytenis.simkus@swedbank.lt.

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