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Lithuanian Inflation Rate Falls to 14-Month Low on Clothing

May 9 (Bloomberg) -- Lithuanian inflation slowed in April to the lowest rate in 14 months as clothing prices and communications costs fell.

Consumer prices rose 3.2 percent from a year earlier, compared with a 3.6 percent increase in March, the statistics office, based in the capital, Vilnius, said today in an e-mailed statement. The median estimate of four economists in a Bloomberg survey was for a 3.1 percent advance. Prices rose 0.6 percent from the previous month.

Inflation is decelerating, helping shore up domestic consumption and economic expansion, which slowed to a preliminary 3.9 percent from a year earlier in the first quarter. Lithuania needs price growth to ease to qualify for planned euro adoption in 2014.

“We expect inflation to continue moderating over the next few months as food and energy inflation continues to ease, and price pressure from the fragile domestic economy remains moderate,” Annika Lindblad, an analyst at Nordea Markets in Helsinki, wrote in a research note. Lindblad predicts inflation will average 3.4 percent this year, which may “be too high to fulfill the Maastricht criteria.”

The yield on Lithuania’s 2022 dollar bond fell 0.07 percentage point to 4.89 percent, the lowest since March 13.

Clothing and shoe prices fell 0.5 percent from a year earlier in April, while communications costs eased 1.9 percent, the statistics office said.

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

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