“Somewhat unexpectedly, Lithuania’s economy ended the year 2012 with a series of deflation, which is traditionally only characteristic of the summer season,” she said in comments about the latest inflation data.
The drop in inflation was mostly driven by the prices of gasoline and diesel fuel, which had been going down since September, she said. However, this year's inflation would not be easy to tame, the analyst warned.
“Changes in taxes and regulated prices implemented in the beginning of 2013 will add approximately 0.5 percentage points to the inflation rate. Meanwhile, the introduction of reduced VAT rates on passenger conveyance services, newspapers, and magazines will hardly make any material effects on the end prices of these goods,” Tauraitė said.
For Lithuania to meet the Maastricht inflation criterion this year, the monthly inflation rates in 2013 should be approximately twice smaller than last year, the analyst said.
“It would only be possible if the global crude prices followed favorable trends and if there was robust harvest, which would not drive the prices of foods higher. Therefore Lithuania would not meet the Maastricht criterion in 2013, either, unless there were favorable coincidences or the authorities made targeted efforts, and the prospect of euro adoption would move beyond 2015,” Tauraitė added.
Lithuania’s consumer prices edged down by 0.1 percent in December from November, marking the third consecutive month of deflation, the country’s statistics office said earlier on Wednesday.
The consumer prices rose by 2.8 percent last month from December 2011, and the average annual inflation rate was 3.1 percent, Statistics Lithuania reported.
