Lithuanian inflation accelerates in August

Lithuanian inflation accelerates in August
By bne IntelliNews September 8, 2016

The Lithuanian consumer price index (CPI) grew 0.8% y/y in August, picking up pace from 0.5% annual expansion the previous month, data released by Statistics Lithuania on September 8 showed.

Inflation has remained positive in every month since the start of this year on the back of rising household income and stabilising oil prices. Still, the index dropped 0.5% in monthly terms in August, although a slower drop than July’s contraction of 0.7%.

Prices increased in most segments in July, with a 6.2% y/y boost in the recreation and culture segment the largest gain, followed by a 5.8% increase in the hotels and restaurant sector. Prices in the transport sector fell 4.6%, while those in the utility sector decreased 2.7%. 

Overall, there is a divergence between price growth in the goods segment versus that in the services segment, with the latter becoming 0.8% more expensive in annual terms in August. Prices of goods, on the other hand, fell 0.2%.

“We forecast the divergence between prices of goods and services to continue," writes Swedbank. "However, prices of goods will start increasing and will push annual inflation higher towards the end of this year and even more so next year. We expect average annual inflation to reach 1.2% this year and 3.0% next year."