Lithuania recorded the highest annual inflation rate in the euro zone in August, with consumer prices rising 5.8% year-on-year (chart), according to harmonised data released by Eurostat on September 1, independent Lithuanian news agency BNS reported.

Lithuania's inflation was substantially above both its Baltic neighbours and the euro zone average, highlighting continued price pressures on households and businesses. Persistently higher inflation can erode purchasing power, increase wage pressures and weaken Lithuania's competitiveness relative to other euro zone economies.

Annual inflation in Lithuania reached 5.8% in August, compared with 2.9% in Latvia and just 1.3% in Estonia.

The euro zone average stood at 3.3%, meaning Lithuania's annual inflation rate was 2.5 percentage points above the currency bloc's overall level.

The Baltic figures also reveal a striking divergence between three neighbouring economies that share many of the same external influences, including energy markets and regional trade conditions.

While Lithuania led the euro zone in annual inflation, its short-term price dynamics were considerably more subdued.

Consumer prices in Lithuania increased by just 0.1% in August compared with July, giving the country the third-lowest monthly inflation rate in the euro zone, according to Eurostat.

Italy and the Netherlands also recorded monthly price growth of 0.1%.

By comparison, consumer prices increased by 0.3% month-on-month in both Latvia and Estonia.

Across the euro zone, prices rose by an average of 0.4% during August.

The contrast between Lithuania's high annual figure and relatively modest monthly increase suggests that much of the country's inflation gap reflects price increases accumulated over the preceding 12 months rather than an exceptionally sharp acceleration in August itself, BNS reported.