Lithuania reported inflation of 11% at the end of last year. However, the peak is yet to come, as prices are expected to increase further in February, according to the SEB bank economist Tadas Povilauskas.
In 2021, the average annual inflation was 4.5%. This year, it should reach 7.2%, decreasing to 1.8% in 2023, SEB bank estimates.
One of the main reasons for high inflation is rising energy prices that will continue to affect prices in 2022, according to Povilauskas.
“It is very difficult to predict the evolution of energy prices this year. But I assume that the annual inflation will peak in February, reaching 12%,” he said.
“From then on, inflation should start to fall,” the economist added.
According to Povilauskas, the inflation projections could change if Lithuania faced poor yields that would increase food prices.
A possible conflict between Russia and Ukraine could also affect energy prices in Europe, translating to even higher inflation, he added.
In 2021, food prices in Lithuania rose by 11.5%, with real estate, water, electricity, gas and fuel prices increasing by around 26.2%.
Based on SEB bank estimates, average wages in Lithuania will grow by 9.1% this year and by 7% in 2023.
“This and next year, wages will grow faster than the average annual inflation,” Povilauskas said, adding that people’s purchasing power should not decrease. (LRT/Business World Magazine)
