Lithuania: Inflation continues to moderate
September 8, 2011
In August, consumer prices edged down 0.4% over the previous month (July: -0.2% month-on-month), which represents the steepest price drop since October 2009. The monthly contraction was driven by lower prices for clothing and footwear as well as for food and non-alcoholic beverages, which were only partially offset by higher housing and utilities cost. As a result of the monthly decline, annual headline inflation slowed from 4.6% in July to 4.4% in August, marking a four-month low. In contrast, annual average HICP inflation (based on the harmonized index of consumer prices) stepped up from 3.5% in July to 3.7% in August. The Central Bank raised its inflation forecast for this year and the next. For this year, the Bank expects inflation to remain at 4.4% (May: +3.8% year-on-year) before moderating to 4.1% (May: +3.9% yoy).