VILNIUS - A central bank official has said that Lithuania's inflation, currently the third highest in the European Union, should be one-third lower and blamed shoddy economic oversight for the difference.
Raimondas Kuodis, director of the Economics Department of the Bank of Lithuania, told a recent conference that the surge in food prices had facilitated about one-half of Lithuania's current annual inflation rate 's 11.4 percent as of March 's but the impact of global food prices were the same for everyone.
"I think that the inflation rate could have been lower by about one-third if the regulation of energy monopolies had been right, the supervision of competition had been more stringent, if efforts had been made to balance the budget and if property prices had not been distorted by tax measures," the Verslo Zinios business daily quoted Kuodis as saying.
The central bank analyst stressed the potential for abuse by businesses. "Lithuania is a small market. All markets have several players, several producers. Hence, there is a much higher risk of cartels or attempts to abuse [the dominance on the market]," he added.
Similar complaints have been heard in Latvia and Estonia, where the dearth of players in any market segment can easily give rise to competition violations.
Kuodis' analysis appears to bear itself out in practice. For instance, in late February Lithuania's competition authority imposed fines on seven dairy companies for exchanging "non-statistical and confidential" information.
Rokiskio Suris, the country's largest cheese producer, was fined more than 800,000 litas (232,000 euros).
The dairy, however, has denied any wrongdoing.
"In our opinion, the exchange of information did not restrict competition. The Competition Council knew about that. If it changed its opinion about how to treat this activity, it could have ordered to discontinue this activity instead of imposing a fine," Rokiskio Suris Chairman Dalius Trumpa told the Baltic News Service. The company announced on April 18 that it had filed an appeal against the fine.
Pieno Zvaigzdes, which is to pay the biggest fine of over 900,000 litas, has said that it will not submit an appeal.
Meanwhile, Lithuania's inflation is set to continue rising and could reel out of control considering the country faces national elections later this year and politicians are unlikely to adopt any strict measures battling the consumer prices.
Latvia currently leads the EU27 in inflation, at 16.8 percent, while Bulgaria is second with 14.2 percent.
