With Lithuania recording one of the highest inflation rates in the euro zone, Finance Minister Gintare Skaiste says it is because the country’s economy has avoided a significant downturn during the pandemic.
“During the pandemic, Lithuania’s economy, like of the other Baltic States, was relatively less affected than the other European Union countries,” Skaiste has said. “During the pandemic, Lithuania’s economy contracted by 0.1%, that is almost nothing. Whereas in Southern Europe, it fell by several percent, in some places by 7% or 8%.”
According to Skaiste, inflation rates are quite similar across the region, and the slightly higher price growth rates in Lithuania are due to the higher consumption capacity of the population.
“Because the economy was less affected during the pandemic, people have relatively more money, which does not reduce the demand for goods. It is therefore natural that supply has no motivation to reduce prices. The reason is that one buys at the price at which one is offered,” she said.
Moreover, Skaiste said, the overall inflation rate was also affected by the fact that Lithuanians spent a higher proportion of their income on the goods the prices of which rose the most.
“Goods such as energy, transport and food have a higher relative share in the consumer basket of Lithuanians than in other EU countries. As the prices of these goods have been growing more significantly than others, inflation in Lithuania is slightly higher than in other countries,” said Skaiste.
Lithuania’s annual inflation rate in June 2022, compared to June 2021, was 20.5%, according to the Consumer Price Index (CPI), which had been methodologically harmonised with the rest of the European Union (EU), while the inflation rate calculated according to the Consumer Price Index (CPI) was 21%.
Meanwhile, consumer prices in the euro zone as a whole in June were 8.6% higher compared to the same month last year. (LRT/Business World Magazine)
