Nov 22, 2023

No Comments Although annual inflation was high for a while, it has now fallen to 2.8 percent. It is true that food in Lithuania is still more expensive than the average in the European Union (EU). “One visit to the store costs around 20 euros. we have to pay to feed the family,” the buyer told “Lietuvos ryto” television. Another interviewed buyer assured that he does not notice a decrease in prices in stores. “I buy what I need while I can. If it continues like this for another six months or a year, I will have to pull my stomach,” laughs the man. “Prices? No. I don’t feel that it will decrease”, assured another buyer. And here’s another customer I met, she assured me that she follows promotions and buys food accordingly. The shopping center “Maxima” monitors the buying habits of customers. According to this, the promotions are applied. “Buyers’ behavior shows that consumption is really slowing down, the amount of goods sold is also decreasing,” commented Raminta Gecevičiūtė, Maxima’s media relations representative. As the representative mentioned, buyers think about what they put in their shopping cart. “Now buyers are especially hunting for various promotions, offers, discounts,” she added. “Swedbank” has updated the forecasts of the Lithuanian economy for the coming year. N. Mačiulis says that the price of all food products has increased by 41% in the last year. “There are very clear assumptions why food prices could decrease by at least 5 percent next year, and this would, of course, contribute to deflationary trends.” There is only one factor of inflation left – rising wages, which mostly raise the prices of services, but even with weak demand, the rise in the prices of services has recently slowed down,” the interviewed economist taught. Although the Bank of Lithuania forecasts 3 percent. inflation next year, according to Swedbank, it will not reach 2 percent. This will also affect the housing market. Now, in all three capitals of the Baltic States, housing affordability has fallen to the level of 2010. Previously, about 400 new housing units were sold in Vilnius per month. Now that number has halved. “The market has slowed down for the past year and a half, probably, and this was due to several reasons: the same start of the war in Ukraine, more expensive materials, more expensive financing, more expensive borrowing for both business and people, and in general – expectations and a certain kind of waiting,” said the Lithuanian real estate agent development association president Mindaugas Statulevičius. A real estate expert says that not only the activity of buyers has decreased. Business has also had to adapt. The recovery in the housing market is still being dampened by high interest rates. N. Mačiulis predicts that the base interest rates will be reduced by the end of next year. “The decrease in interest rates is very likely already next spring, from April. Every month, the European Central Bank is likely to cut interest rates by a quarter of a percentage point, and we predict that by next year the base interest rates will decrease by one and a half percentage points to 2.5 percent,” he explained. The Lithuanian economy is expected to shrink by 0.3 percent this year. Next year, GDP should grow by more than a percent. “Until we see interest rates and lower prices in Lithuania, the recovery will be very weak,” added the interviewed economist. According to Swedbank, employment will decrease slightly next year. The unemployment rate will reach more than 7 percent, and wage growth will slow to 8.5 percent. 2023-11-20 07:35:00