Lithuania's CPI rises 0.3 pct in August from July

Sep 10, 2007 - Consumer prices in Lithuania grew at an annual rate of 5.5% in August, the Department of Statistics Lithuania, said Monday. This compares with the 5.1% rise in consumer prices in the previous month. On a monthly basis, consumer prices edged up 0.3% in August, slowing from 0.7% increase in July. The rate of inflation in August was the fastest in ten years, the Danske Bank said.

In August, annual inflation was pushed by 10.5% climb in prices of food products and non-alcoholic beverages, while housing, water, electricity, gas and other fuel prices jumped 11.4%. Clothing and footwear prices eased 4.8%, while communication prices slumped 7%.

Over the month, prices of food products and non-alcoholic beverages gained 0.3% in August, propelled by a 5.3% increase in the prices of milk, dairy products and cheeses; while prices of food products and non-alcoholic beverages advanced 1.1% in the previous month. Alcoholic drinks and tobacco products climbed 1.9% in August, while prices in the sector gained 0.6% in the last month.

Clothing and footwear prices slipped 0.3% in August, after falling 3% in the earlier month. Transport prices dropped 0.3% in August, sliding from a 0.9% growth in the preceding month. Petrol prices slumped 4.9%, while diesel prices slipped 0.2% and prices of local passenger road transport services dropped 5.2%. Communication prices eased 0.1% following the 0.6% drop in communications prices in the previous month. Prices of data processing equipment slipped 3.2%, while prices of telephone and fax machines eased 1.3%.

The overheating of the economy with annual wage growth of over 20% continued to be a cause for worry, the Danske Bank observed. “Lithuania has a relatively large current account deficit, around 10% of GDP, a credit growth of more than 50% annually, negative real interest rates and low exports-to-imports. This, along with the inflationary pressures, adds further to the rather unsustainable outlook for the economy, and urgent policy measures to curb inflation are still needed,” according to the Danske Bank.