Lithuanian Inflation Rate Falls to Lowest in 20 Months on Food

Lithuanian inflation was the slowest in 20 months in May as growth of food and beverage prices eased.

Consumer prices rose 2.5 percent from a year earlier, compared with a 3.2 percent increase in April, the statistics office, based in the capital, Vilnius, said today in an e-mailed statement. The median estimate of five economists in a Bloomberg survey was for a 2.6 percent increase. Prices increased 0.1 percent from the previous month.

Decelerating inflation will help shore up the Baltic nation’s domestic consumption and economic expansion, which slowed to 3.9 percent in the first quarter. Improving inflation expectations helped raise consumer sentiment to the highest in eight months in May.

Lithuania also needs price growth to ease to qualify for its planned euro adoption in 2014. Countries seeking to make the currency change must keep inflation at less than 1.5 percentage points above the average of the three lowest levels in the European Union.

Lithuania’s 12-month consumer-price growth was 4.1 percent in April, according to Eurostat, while the threshold for the currency changeover was 3.1 percent.

To contact the reporter on this story: Milda Seputyte in Vilnius at mseputyte@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net