The Lithuanian consumer price index (CPI) grew 2.9% y/y in October, 0.5pp above the annual reading for September, Statistics Lithuania said on November 9.
The annual price growth in October extends the inflationary trend in the Lithuanian CPI to 34 months. Inflation is approaching the 3% mark again after a series of subdued readings in six previous months.
Prices increased in all but two segments in October. Similarly to September, growth in the headline CPI was driven by a 9.3% annual expansion in transport prices. With oil prices beginning to decline, however, the impact of the transport category should diminish as well.
Prices rising 5.7% y/y in the housing segment and a price growth of 2.8% y/y in the alcoholic beverages and tobacco products segment also contributed. Prices of food grew 0.2% y/y in September.
Overall, price growth in the goods segment came in at 2.5% y/y in October, adding 0.7pp to the annual growth rate seen in September. Services were 4.1% more expensive in October in annual terms, 0.1pp above the annual growth the previous month.
Broken down by product category, inflation was driven primarily by expanding prices of fuels and lubricants, solid fuels, vegetables, as well as catering services and car repair, data showed. On the other hand, growth was impeded primarily by falling prices of fruits.
In monthly terms, Lithuanian CPI grew 0.6% in October after growing 1.3% m/m in September. Goods prices grew 1% m/m. Prices of services declined 0.4% on the month.
“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,” Swedbank said in a comment.
The European Commission predicts slightly more moderate inflation, at 2.6% in 2018.
In October 2017, CPI growth came in at 4.4% y/y. The index grew 3.7% in 2017 overall.