Annual inflation in Lithuania hits 11-year high of 11.3 percent

The Associated Press
Tuesday, April 8, 2008

VILNIUS, Lithuania: Lithuania’s inflation reached an annual rate of 11.3 percent in March, the highest in 11 years, the nation’s statistics office said Tuesday.

The result means that Lithuania has overtaken Estonia, where the annual consumer price index fell slightly in March to 10.9 percent, to have the third highest in the 27-member EU ? behind Latvia and Bulgaria.

Prices for food and nonalcoholic beverages soared 18.1 percent compared with March 2007, while housing costs jumped 17.6 percent over the 12-month period, the statistics office said.

Analysts believe consumer prices will continue climbing in Lithuania as the economy absorbs higher energy costs and excise taxes.

The country will also hold parliamentary elections in October, and government leaders are reluctant to slash spending for fear of voter backlash.

In recent years Lithuania’s economy has undergone a period of rapid expansion, with GDP growth reaching 8.8 percent in 2007.

Retail data suggest that domestic demand remains strong, which will continue to apply inflationary pressure on the economy.