The Lithuanian consumer price index (CPI) grew 3.5% y/y in April, accelerating from the 3.1% recorded the previous month, Statistics Lithuania announced on May 9.
The result extends the strong surge in inflation that began late last year across Central & Eastern Europe, which is largely driven by stabilisation of oil prices and the low base from 2016. However, while the CPI gains have show signs of fading elsewhere in the region, price rises appear to be maintaining momentum in the Baltics. That suggests the tightened labour markets and return of EU-funded investment are pushing significant demand-led price pressures.
Inflation has now remained positive every month since January 2016, supported by rising household income and stabilising oil prices. The index grew 1% in monthly terms in April, 0.1pp slower than in the previous month.
In annual terms, prices increased in all but two segments, with the headline growth driven by a 2% increase in food prices, a 7.8% growth in the transport sector, and 12.6% expansion in prices of alcohol and tobacco products. Prices fell in the utilities segment and communication.
Prices are expected grow 3% in 2017, according to Swedbank. The European Commission’s forecast is for an expansion of 2.1%. Annual average inflation in 2016 came in at 0.9%.