Flash comment: Lithuania - May 9, 2012

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Flash comment: Lithuania - May 9, 2012: Prices increased by 0.6% in April, in line with our expectations

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Flash comment: Lithuania - May 9, 2012

  1. 1. Flash comment: Lithuania Economic commentary by Economic Research Department May 9, 2012 Prices increased by 0.6% in April, in line with our expectations Contribution to annual CPI growth, pp As expected, inflationary tendencies continued in April. Consumer 14 prices grew by 0.6% on a monthly basis, resulting in annual 3.2% 12 inflation. The average consumer price inflation decreased by 0.1 10 percentage point to 4.1% and is likely to decrease during the 8 coming months. 6 4 Inflation in April was mostly effected by 3.9% growth in clothing and 2 footwear prices due to new spring and summer collections, which 0 -2 contributed 27% to the overall monthly inflation; and 1.4% increase in prices for transport goods and services (esp. petrol, liquid 2007 2008 2009 2010 2011 2012 petroleum gas and air transport services), which had 16% Food Trans ports Housing Others CPI growth contribution. Source: Statistics Lithuania, Sw edbank Overall prices index was also influenced by 0.6% increase in food prices (esp. milk, eggs, vegetables and potatoes). Inflation was Consumer and producer prices partly offset by 0.9% decrease in prices of communication. 16% 4% In April, compared with March, producer prices declined by 0.2%. 12% 3% 8% 2% However prices of products sold in Lithuanian market were 0.3% 4% 1% higher. Meanwhile, the average annual producer price inflation 0% 0% reached the peak (14.5%) at the end of last year; it edged down to -4% -1% 11.4% in April and is likely to continue on the downwards path -8% -2% -12% -3% during the rest of this year. -16% -4% 2009 2010 2011 2012f Outlook Monthly inflation (rs) Annual inflation (ls) As the price of oil dropped significantly during recent weeks and Producer prices to Lithuanian market, yoy (ls) Source: Statistics Lithuania domestic factors remain muted, inflationary pressures are expected to ebb somewhat. During the rest of this year we expected much slower monthly inflation and some deflation during summer months. CPI and inflation expectations 14 105 We forecast consumer prices to increase by 2.8% on average this 12 90 year and be the main hurdle to meeting Maastricht criteria. 10 75 8 60 6 45 4 30 2 15 Lina Vrubliauskienė 0 0 -2 -15 Senior Economist + 370 5 258 2275 2006 2007 2008 2009 2010 2011 2012 lina.vrubliauskiene@swedbank.lt CPI, % yoy (ls) Cons um ers inflation expectation (rs) Source: Statistics LithuaniaSwedbank Economic Research Department Flash comment is published as a service to our customers. We believe that we have used reliable sources and methods in the preparation of the analyses reported in this publication.SE-105 34 Stockholm, Sweden However, we cannot guarantee the accuracy or completeness of the report and cannot beek.sekr@swedbank.com held responsible for any error or omission in the underlying material or its use. Readers arewww.swedbank.com encouraged to base any (investment) decisions on other material as well. Neither Swedbank nor its employees may be held responsible for losses or damages, direct orLegally responsible publisher indirect, owing to any errors or omissions in Flash comment.Cecilia Hermansson, +46 8 5859 7720

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