Year-on-year Inflation decreased throughout 2009 in Lithuania until September. Source: Statistics Department

VILNIUS — Despite the economic crisis, Lithuanian consumers are continuing to pay more for goods and services statistics show with annual inflation for September at 2.7 percent.

It is the first month of inflation this year since February, going up 0.6 percent against August, the country’s Statistics Department reported on Thursday.

“Inflation is pretty low, but its quite unusual in such a deep recession,” SEB Bank economist Vilija Tauraitė told Baltic Reports. “The reason we have inflation and not deflation is administrative decisions — tax increases mainly and then resources and inflation in place doesn’t reflect domestic demand. This is administrative decisions making it plus, not minus.”

She said that September was the first month of inflation since February because of the rise in value-added tax.

“This is related to a VAT increase that was felt on Sept. 1. The rate went from 19 to 21 percent. Prices went up and then there is a new season for clothing, which pushes prices up,” she said.

Annual inflation was influenced most by a 10.5 percent price rise for housing, water, electricity, gas and other fuels, a 14.6 percent rise on alcoholic beverages and tobacco products, a 17.2 percent rise health care group of goods and services as well as by a 9.7 percent price drop for clothing and footwear.

SEB Bank expects inflation to continue next year because of the closure of Ignalina Nuclear Power Plant, which until the end of the year produces affordable electricity for Lithuania.

“Next year we will probably have inflation because of the closure of Ignalina and rise of prices. This will have two effects – the cost of the electricity and also a second phase because everything uses electricity — for manufacturing, for keeping shops and so on,” Tauraite said.

The economist said a drop in heating prices would condition inflation slightly this winter.