Tuesday, September 08, 2009

Baltic Disinflation Continues

As is likely for almost all countries/currency areas, the euro area saw its inflation rate rise from in August, from -0.7% in July to -0.2% in August.

However, the Baltic countries saw their inflation numbers decline further. The EU-harmonized index is not yet available, however, the annual change of the non-harmonized measure declined 0.2% between July and August in Estonia, with 0.7 percentage points in Latvia and with 0.4 percentage points in Lithuania.

Relative to the currency area their currencies are pegged to, the euro area, the Estonian inflation rate likely declined 0.7 percentage points, the Latvian inflation rate 1.2 percentage points and the Lithuanian inflation rate 0.9 percentage points.

Since the annual inflation rate of most countries will increase dramatically in the coming months, the Baltic inflation rates will likely post more moderate declines in absolute terms. But in relative terms, Baltic inflation rates will continue to decline significantly in the near future.


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