In Lithuania consumer prices to decline by 0.3% m/m in August

Consumer prices based on the HICP are expected to fall by 0.3% m/m in August, the stats office projected. The decline will ease from 0.8% m/m reported in July, while prices are expected to increase by 0.6% y/y in the month. The annual average inflation is therefore expected to speed to 0.2% in August from a flat rate in July, the stats office also said.

Volatile food and drink prices as well as transport goods and services costs reflecting oil prices will be the main deflationary factors in August. The major factor to the upside in August will be the prices of hotel and restaurant services and other goods and services, which in our view reflects the pressures from the accelerating economy and domestic demand. We remind that CPI growth edged slightly lower to 0.5% y/y in July from 0.7% y/y previously as there are both demand and supply factors that underpin price growth.

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