Lithuania finishes first in inflation

  • 2006-01-11
  • From wire reports
VILNIUS - Lithuania had the lowest rate of inflation among the Baltic states last year, maintaining the title for several years in a row. (See table on Page 14.) Consumer prices rose 3 percent in December compared with December 2004, while the average annual inflation rate for 2005 was 2.7 percent, the Statistics Department reported.

Consumer prices edged up by 0.1 percent in December from November.

Analysts said that the December-to-December inflation rate could slightly exceed the Maastricht inflation limit, one of the key criteria the country will have to meet to join the eurozone.

According to the Statistics Department, last year's inflation was mostly due to a rise in prices of transport goods and services and in prices of housing, water, electricity, gas and other fuel.

In December versus November, prices of food products and non-alcoholic beverages rose by 0.8 percent, prices of transport goods and services by 0.4 percent, and healthcare prices by 0.6 percent.

This was partly offset by a 1.2 percent drop in clothing and footwear prices and a 1.6 percent decline in prices for communication goods and services.

"Lithuania's compliance with the Maastricht criterion will be assessed on the basis of the harmonized consumer price index, which has not been published for December yet. It was 2.7 percent in November, while the Maastricht criterion was 2.5 percent," said Alge Budryte, chief analyst at SEB Vilniaus Bankas.

"However, based on the published trends for December's producer price index, we can make a conclusion that our forecast of 2.6 percent is probably too optimistic and that the average annual harmonized consumer price index will be higher," she said.

In order to comply with the Maastricht inflation criterion, Lithuania must keep its inflation rate within 1.5 percentage points of the three best-performing EU countries.