Flash comment: Lithuania - September 10, 2012:Unexpectedly, prices increase by 0.2% in August

1. Flash comment: Lithuania
Economic commentary by Economic Research Department September 10, 2012
Unexpectedly, prices increase by 0.2% in August
Contribution to annual CPI growth, pp Somewhat unexpectedly, prices increased by 0.2 percent in August
6 and were 3.3 percent higher than a year ago. Despite slight decline
in prices at the beginning of the summer, annual inflation has been
4 increasing for three months now. In August, average annual
inflation remained unchanged at 3.5 percent.
2
The major factor behind price increases was more expensive oil
0 and cheaper euro, which caused a spike in fuel prices. Fuel and oil
prices have contributed 0.274 percentage points to monthly
-2 inflation. The second reason was more expensive clothes and
2010 2011 2012 footwear, as new collections reached the stores. Finally, a more
Food Transports Hous ing
Others CPI growth expensive public transport had 0.014 percentage point contribution
Source: Statis tics Lithuania, Swedbank to inflation (mainly due to steep increase of prices of public
transport in Vilnius).
Annual, monthly and average annual
Outlook
change in prices, % Somewhat stronger euro and more stable prices will have a
positive effect and we do not expect rapid inflation during the
6% 1.50% remaining months of this year. However, unfavorable weather
1.25%
conditions in U.S. and some other countries are pushing the price
4% 1.00%
of corn, soy beans and other food products to record highs, which
0.75%
will contribute to inflationary pressures in Lithuania. We forecast
2% 0.50%
0.25%
that average annual inflation will continue trending downwards to
0% 0.00% 3.0%, but going much lower below this level is less likely.
-0.25%
-2% -0.50%
2010 2011 2012
Monthly growth (rs) Annual growth (ls )
Average annual (ls)
Source: Statistics Lithuania
Nerijus Mačiulis
Chief Economist
+ 370 5 258 2237
nerijus.maciulis@swedbank.lt
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reliable sources and methods in the preparation of the analyses reported in this publication.
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