Macroeconomic Forecast Lithuania

August 2007 | Macroeconomic Forecasts

The annual rate of consumer price inflation was unchanged at 4.8% in June, bringing the average for the past 12 months to 4.3%. Inflation in June partly reflected a 9.1% y-o-y jump in food prices and an 11.4% y-o-y increase in housing, water, electricity, gas and other fuels. Burgeoning domestic demand and a tightening job market have raised inflation expectations and driven up core inflation. Wage growth is outpacing productivity, causing nominal unit labour costs to accelerate. We expect inflation to average 4.7% this year, up from 3.8% in 2006, and to end the year at 4.3% y-o-y.

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