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According to Marius Dubnikov, vice president of the Lithuanian Business Confederation, inflation can exceed 5 percent by the end of the year, which will affect everyone in the country.
Residents returning to work and driving more and more around the city find that fuel prices have been going up for some time. Drivers remember refueling a year ago at much lower prices, less than the euro. True, now the situation on the screens of gas stations has changed significantly.
“Yes, prices have risen by up to 15 percent, I imagine. It is not a bit here anymore. And then I would like to have more money and earn it,” says the resident who came to refuel.
“It just came to our attention then. Need and need – castle. As I determine, I pay as much,” says another.
Representatives of gas stations assure that prices will return to normal levels, the level before the pandemic. Admittedly, this seems to be just the beginning and fuel prices will go up even higher.
Karolis Stasiukynas, Chairman of the Board of the Lithuanian Service Stations Union, declares: “Since March, some pennies have been going up and up. We see a trend for that price to rise. Both due to the increase in raw materials and the increase in maintenance costs. ”
And the price growth trends are also reflected in the Lithuanian Statistics information. In May this year, compared to the same period last year, annual inflation is 3.5 percent. And this is the highest inflation rate in recent years. Not only that, since July, the price of electricity has increased another 8 percent for the population, and the price of gas for homes has increased between 26 and 50 percent.
According to M. Dubnikov, Vice President of the Lithuanian Business Confederation, some products will become more expensive in the country in the near future, which is affected by rising raw material prices around the world:
“If raw materials become more expensive, let’s say the prices of steel have almost doubled, which is used in construction. Wood has risen in price by 30 percent. The price of oil has also risen almost three times since May 2008. Last year, it is obvious that all goods and services should really get expensive. “
Residents themselves say that prices for certain building materials have already risen to unprecedented levels.
“Basically three times: polystyrene, concrete, cement,” says the resident.
“All kinds of mixes, all kinds of details have become more expensive, maybe around 10 percent, here I work with someone,” says another.
The Bank of Lithuania assures the population that the price increase should be temporary and will decrease after a while. And as the economy and population recover from the broader pandemic, inflation will be difficult to avoid.
Eglė Coppa, Head of Macroeconomics and Forecasting, says: “.
And some economists take the opposite view, warning that the period of low prices should be forgotten, at least this year. The vice president of the Lithuanian Business Confederation predicts that inflation in the country will exceed 5 percent by the end of this year. And each inhabitant of the country will feel it at the cost of their own pocket.
“Inflation of more than 5 percent is already starting to be felt because we realize that our wallets are emptying much faster than usual. And what will happen next year is very difficult to predict. In fact, it will depend largely on people’s behavior. If we act in this way, when we spend now, it is very likely that the inflationary spiral will carry over to next year, “says M. Dubnikov.
Rapid price growth occurs not only in world commodity markets, but also in food markets. Here’s an average global food price index that has risen 40 percent in one year.
According to data from the Lithuanian Department of Statistics, compared to May this year and last year, the most expensive food products were rice, cereal flakes, fish, seafood, oil and fat, fresh and frozen vegetables. Neighbors have been saying for some time that without a few tens of euros in the store there is nothing to do. It is true that food prices can rise even more if the situation on world markets does not change.
Indrė Genytė-Pikčienė, Chief Economist at INVL Asset Management, says: “With our own resources, we may not feel as direct an effect on our producers. Of course, it is too early to predict, because the whole situation will depend on this year’s harvest. We will definitely avoid direct price increases, we just need to make sure that prices increase with us as well. “
Economists also speak of the fact that services in Lithuania will continue to become more expensive: beauty salons, hairdressers, restaurants, hotels.
“Even after the stabilization of the prices of raw materials in the markets, the phenomenon of labor shortage and rising wages will continue. This means that if the prices of goods become more expensive now due to the more expensive raw materials, prices for services are likely to rise faster next year, due to the fact that average wages and labor costs are rising faster. ”Swedbank says Chief Economist Nerijus Mačiulis.
The European Union is allocating nearly a billion euros to countries affected by the pandemic to revitalize their economies. However, economists believe that the economies of some countries, including Lithuania and Estonia, are already above pre-pandemic levels. So there is nothing to relive, and such financial stimulus could lead to even higher inflation.
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