1. Flash comment: Lithuania
Economic commentary by Economic Research Department March 8, 2012
Inflation was 0.4% in February, mostly contributed by higher fuel and
heating energy prices
Contribution to annual CPI growth, pp As anticipated, inflationary tendencies continued in February.
14 Consumer prices grew by 0.4% on a monthly basis, slightly higher
12 than our forecasts (0.3%), resulting in annual 3.7% inflation.
10 Average consumer price inflation was 4.2%, the same as in the
8 previous month. However, it is likely to decrease in forthcoming
6 months even after higher inflation anticipated in March due to the
4 5% increase in excise duties on tobacco products.
2
0 Inflation in February was mostly effected by 1.1% increase in prices
-2 for transport goods and services (esp. diesel fuel and petrol), which
2007 2008 2009 2010 2011 2012 contributed 34% to the overall monthly inflation and 0.9% growth in
Food Transports Housing housing costs (due to more expensive heating energy), which had
Others CPI growth 31% contribution. Overall prices index was also influenced by 0.4%
Source: Statistics Lithuania, Swedbank
increase in food prices (esp. vegetables and potatoes, milk, meat).
Inflation was partly offset by 0.9% decrease in prices of clothing
CPI and inflation expectations and footwear due to the seasonal discounts.
14 105
12 90 In annual comparison the largest growth in prices was
10 75 demonstrated in goods and services of prime necessities: housing
8 60 (9.5%), transport (5.4%) and food products (4.4%). However, prices
6 45 for communication (-2.8%) as well as for clothing and footwear
4 30 (-1%) showed the decline. Prices for consumer goods over the year
2 15 grew by 4.1%, while those for consumer services increased slower,
0 0 by 2.3%.
-2 -15
2007 2008 2009 2010 2011 2012 Outlook
CPI, % yoy (ls)
Consumers inflation expectation (rs) This year inflation in Lithuania will be driven by fluctuating fuel and
Source: Statistics Lithuania
food prices due to global influences. Although consumers’ inflation
expectations remain robust, high unemployment and the
uncertainty in euro zone’s economy will have lower pressure on
consumption and prices in Lithuania. We forecast average annual
inflation to be 2.5% this year, but there is upside risk related to
recent developments in the crude oil market.
Lina Vrubliauskienė
Senior Economist
+ 370 5 258 2275
lina.vrubliauskiene@swedbank.lt
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