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Inflation still rising in Estonia, Lithuania

  • 2007-12-19
  • By Mike Collier

VILNIUS/TALLINN 's Latest inflation figures showthat consumer prices are still on the rise in the Baltic region, though therate of increase was lower than some analysts predicted.

In December 2007, Lithuania's inflation rose to 8.1% year-on-year (0.5% month-on-month) up from7.8% y/y (1.1% m/m) in November.

In Estonia during the same period , consumer prices were 9.6%higher y/y and 0.7% m/m.

The index was mainlyinfluenced by the increase in the prices of food, transport and heating.

Analystsat Danske Bank were among the first to comment on the Lithuanian figures,saying that "decreasing prices of clothes andtelecommunications services reduced somewhatthe pressure on the inflation level.The acceleration in inflation will be stronger at the beginningof 2008, mainly due to a rise in gas prices and an increase in excise duties for fuel."

But there was some good news when Danske pointedout that the Baltic economies so far seem to be escaping the attentions ofcurrency speculators causing problems in the rest of 'emerging Europe'.

"We are seeing several currencies under heavy selling pressure 's mostnotably in the Romanian and Icelandic FX markets. In the credit markets we in generalsee... yield spreads widening in Romanian, Bulgarian, Kazakh, and Icelandicmarkets. It is significant that there is no pressure in the Baltic markets,which normally have been trading in line with the other "suspects," Danskepoints out.