With annual inflation at 0.5 percent in September and monthly inflation at 0.3 percent, economists say prices may rise faster in the coming months. Analysts believe that average annual inflation this year will be lower than forecast, while prices will jump more sharply next year.
The State Data Agency reported on Tuesday that annual inflation stood at 0.5 percent in September and average annual inflation was 0.9 percent. Prices rose by 0.3 percent in September compared to August.
“Month-on-month inflation is not very high, but that is probably to be expected. Prices will start to rise a bit in the autumn, as seasonal things will come into play in September, when school and the busier season start,” Šiaulių Bankas economist Indrė Genytė-Pikčienė told BNS.
According to her, fuel prices are currently having a significant moderating impact on inflation, but there is still uncertainty regarding oil prices.
According to Swedbank economist Nerijaus Mačiulis, however, energy resources are not expected to become particularly expensive this year or next.
“The oil price is almost at its lowest level of the last three years, there is sufficient supply in the world, Saudi Arabia is planning to increase its production quotas, which means that oil supply is likely to grow faster than demand next year, and if we look at it solely through the prism of fundamental economic reasons, we do not see what could cause oil to become more expensive,” Mačiulis told BNS.
Nor does he expect tensions in the Middle East to send oil prices up.
According to Mačiulis, food has barely increased in price over the last year, but services have become more expensive.
“This is probably good news for lower-than-middle-income earners, who spend most of their expenditure on food and other basic necessities rather than on services. At the same time, the middle class, the more affluent, spend a larger part of their budget on services, which have become quite significantly more expensive this year,” the economist said.
According to the analyst, inflation in Lithuania has been lower than forecast in the last two months, which is largely due to cheaper food raw materials and cheaper oil and fuel.
“Currently, annual inflation of 0.5 percent is lower than forecasted and it seems that the average annual inflation this year will be lower than forecast as well, but external factors have contributed to it,” Mačiulis told BNS.
According to Genytė-Pikčienė, Šiaulių Bankas’ forecast for the average annual inflation was 0.9 percent last May. This could still be accurate by the end of the year, she believes.
“We had a string of lower inflation months, which dragged down the overall annual average, but in the autumn we will probably see a rebound in the consumer price index and average annual inflation will be close to 0.9 percent, maybe a bit lower,” she said.
According to Mačiulis, annual inflation is expected to be around 2 percent next year.
“Next year, it will be difficult to expect commodity prices to continue falling, especially given how fast the minimum monthly wage is rising, how much the average wage is rising, so even if external trends remain favourable, inflation will be fuelled by internal factors next year, and it is very likely that by the beginning of next year, inflation will already have risen to above 2 percent,” the economist said.
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