Lithuanian inflation picks up speed to 1% y/y

Lithuanian inflation picks up speed to 1% y/y
By bne IntelliNews December 8, 2016

The Lithuanian consumer price index (CPI) grew 1% y/y in November, accelerating slightly over the previous month, data released by Statistics Lithuania on December 8 showed.

Inflation has remained positive every month since the start of this year on the back of rising household income and stabilising oil prices. The index grew 0.3% in monthly terms in November, following a 0.5% m/m expansion the previous month.

Prices increased in all but three segments, with a 5.3% y/y boost in the hotels, cafes, and restaurants sector, followed by a 4.8% in the alcoholic beverages and tobacco product segment. Prices fell the most in the communication sector, contracting 6%. There also was a fall of 1.2% in the utility sector. Food prices gained 1%.

Overall, there is a divergence – however diminishing - between price growth in the goods segment versus that in the services segment, with the latter becoming 1.9% more expensive in annual terms in November. Prices of goods, on the other hand, grew just 0.6%.

Lithuanian inflation is expected to come in at 1.2% in 2016, before picking up speed to 3% in 2017, according to Swedbank. The European Commission’s forecast assumes growth of 0.7% this year and 1.7% the next.