Economists say that growing wages, rising prices for some food products and a hike in the excise tax on alcoholic drinks were the main factors behind the jump in consumer prices this year and some of them expect inflation to slow down next year.
Rokas Grajauskas, Danske Bank's chief economist for the Baltic countries, says that the biggest upward pressure on inflation will come from rising wages this year and next year.
"We believe that wage growth is just gathering speed, which will maintain the upward pressure on services prices. Services prices will (next year) increase at a similar rate to that of this year or even somewhat higher, but food and energy prices will rise at a lower rate. As a result, the overall price growth should be slower," he told.
SEB Lithuania's chief analyst Tadas Povilauskas predicts that diesel fuel will next year emerge as a new inflation-driving factor.
"A hike on the excise tax on diesel fuel is proposed, with (diesel fuel) prices forecast to rise by 2% if oil prices remain unchanged. The excise tax on tobacco grows at a stable rate. It remains to be seen how natural gas and electricity prices are going to change," Povilauskas told.
"I think if economic growth trends remain the same and the wage growth decelerates somewhat compared with this year, around 7%, then that wage-driven inflation will be slightly lower," he said.
Luminor's chief economist Zygimantas Mauricas is somewhat more pessimistic about the outlook for inflation next year, saying that it may be even higher than this year due to external factors.
"We can't rule out a scenario where it accelerates further. It is possible that we will see similar or even higher inflation next year," he told.
The central Bank of Lithuania expects that the country's EU-harmonized average annual inflation rate will reach 3.4% this year before easing to 2.2% in next year. SEB Lithuania forecasts inflation at 3.3% in 2017 and at 2.8% in 2018, and Danske Bank, at 3.7% and 3.1%, respectively.
Luminor, a new bank created through the merger of the Baltic operations of DNB and Nordea, plans to release its latest forecasts by the end of November.
