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Tuesday, April 8, 2008

Lithuania Inflation March 2008

Lithuania's inflation rate continues to rise. The annual rate rose to 11.3 percent, the highest since January 1997, from 10.8 percent in February, according to data released by the Vilnius-based statistics office earlier today.

Prices rose 1 percent in a month, compared with a 1.1 percent gain in February. Food prices, the biggest item in the consumer basket with a 26 percent weight, rose an annual 18.1 percent. Housing expenses such as water, heating and gas, the second biggest item in the consumer basket, rose an annual 17.6 percent, the statistics office said.

Lithuania is struggling to get the inflation rate, which is the third-fastest in the 27-nation European Union behind Latvia and Bulgaria, under control. Growing prices recently lead to teachers' strikes over pay increases and helped provoke a no-confidence vote in the parliament which Prime Minister Gediminas Kirkilas survived. Parliamentary deputies voted 68-65 to reject the motion. Kirkilas, whose five-party coalition controls 72 of the parliament's 141-seats, became prime minister in July 2006. His government's term expires in October.

The Finance Ministry have recently raised the 2008 inflation forecast to 9.2 percent.

A comparative view of Baltic inflation is also quite revealing. As can be seen in the chart below, Latvian inflation is head and shoulders out in front, though this is one competition noone is very happy to be winning.

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