Macroeconomic Forecast Lithuania

Although inflation has turned positive again in August, at 1.8% y-o-y, the year-to-date average still measures just 0.6% y-o-y, compared to 5.9% during the same period a year earlier. While the unwinding of base effects in H210 could see headline y-o-y inflation remain around the 2.0% mark, prompting us to revise up our end-2010 CPI forecast from 1.0% to 1.7%, we continue to see few inflation risks on the horizon over the medium term.

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