CPI inflation slows down to 3.4% y/y in Lithuania

CPI inflation slowed down to 3.4% y/y in May from 3.5% y/y in April, the stat office reported on Thursday. The deceleration was mostly on the back of transport prices which eased their growth to 4.9% y/y in May from 7.8% y/y in April as energy prices are starting to stabilize on y/y basis and we expect to see more of this in the following months. Food price growth remained stable in May while alcohol and tobacco prices accelerated even further to 13.2% y/y. Prices of restaurants and hotels also retained their rather high rate of increase at 7.6% y/y likely on the back of strong tourist inflows in the country. On monthly basis consumer prices fell by 0.1% m/m following 8 consecutive months of growth as the 1.5% m/m decline in transport prices could not be compensated by upward prices changes in other categories.

CPI inflation will likely further ease its growth in the following months as the base effect from higher oil prices will gradually fade off. Still some upward pressure on prices will come as of July due to the planned increase in natural gas prices for households by 5.0-8.3%.

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