The Minister of Finance explained why inflation in impoverished Lithuania is higher than in the euro zone

 "As Lithuania records one of the highest inflation rates in the entire euro zone, Finance Minister Gintarė Skaistė explains that the fact that the country's economy avoided a significant recession during the pandemic could have contributed to such price growth trends.

 

    "During the pandemic, Lithuania's economy, like that of other Baltic states, was relatively less affected than that of other European Union states. Let's say, comparing us with the countries of Southern Europe, the difference is really significant. During the pandemic, the Lithuanian economy fell by 0.1 percent of GDP. It is almost nothing. Meanwhile, in Southern Europe it fell by a few percent, in some places by 7-8 percent," G. Skaistė told the "15min" portal.

 

    The minister notes that the inflation indicators are quite similar throughout the region, and the slightly higher rates of price growth in Lithuania were determined precisely by the greater consumption opportunities of the country's population.

 

    "Because the economy has been less affected by the pandemic, some people have relatively a little more money, and as a result, the demand for goods does not decrease. Therefore, it is natural that supply has no motivation to lower prices, but rather increases them. Due to the fact that it is bought for the amount for which it is offered," she assured.

 

    In addition, the Minister of Finance points out that general inflation indicators are also affected by the fact that the remaining impoverished Lithuanians allocate a relatively larger share of all expenses to the fastest getting expensive goods.

 

    "Funds allocated to goods such as energy, transport, and food occupy a relatively larger share of the basket of impoverished Lithuanian consumers than in other European Union countries. Since these goods grew more significantly than others, as a result, inflation in Lithuania is more than twice as high as in other countries," said G. Skaistė.

 

    ELTA reminds that according to the consumer price index (CPI), methodologically harmonized with other European Union (EU) member states, the annual (June 2022 compared to June 2021) inflation in Lithuania amounted to 20.5 percent, and according to the consumer price index (CPI) estimated - 21 percent.

 

    At that time, consumer prices in the entire euro area increased by 8.6 percent in June compared to the same month of the previous year.

 

    The inflation rate in the euro area has never been so high since the euro was introduced in 1999 as a non-cash means of payment."