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Friday 20.07.2018 | Name days: Ramona, Ritma

Lithuanian government forecasts rapid inflation

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Taking into consideration grocery and and other goods price increase, Lithuania consumer prices are to increase this year, announced the Lithuanian Finance Minister, changing his previous deflation forecast.

The inflation rates will reach about 1.1%, as compared to the forecasted 0.1% deflation on May 13, the ministry informed the portal Bloomberg.com. The price increase is related to the euro exchange rate against dollar, oil and grocery prices, as well as, changes in compensation trends, reported the Ministry. The Lithuanian government also considers that the inflation rate at the end of the year will reach 2.5%. The inflation in the Baltics in the period of ten months has been the rapidest – it reached 1.9% in July.

Lithuania, which has pegged litas to euro, uses deflation and wage reductions to compete with other countries. They do it even after last year’s «credit-boom» that caused the second heaviest recession of the European Union.

Next year’s consumption prices are to increase by 1.8% on average. The Lithuanian government forecasts growth: this year by – 1.8%, next year – by 2.8%. In the second quarter of the year,as compared with the three previous months, salaries have increased by 1.2%, which is the first salary growth since 2008. As the economics has started to recover and the workforce that had emigrated – has now returned.

The growth of economics can go up by 4-5% in the second half of the year. It can be explained with the increase in the export turnover and «stabilization of domestic demand,» indicates the ministry. The increase in production could be observed in the last quarter of this year. Foreign trade and industrial production contributed to it.

The Gross Domestic Product (GDP) reached 1.3% after it had experienced 2.8% drop in the first quarter of the previous year. This year unemployment rate in Lithuania is likely to reach 17.9% mark. In 2011 it will fall to 16.2%.


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