Page 24 - CE Outlook Regions 2024

2.2.3 Inflation and monetary policy
According to the IMF forecasts, annual inflation in Lithuania will decline to 4.1% at the end of 2023, and it should amount to an average 3% in 2024.
Meanwhile, in Latvia, by 2024, inflation is expected to slow down to 3.2%, but HICP inflation excluding energy and food is projected to hover at 4% throughout 2024 as services price growth is set to remain higher than the other components.
The European Commission forecasts that Estonia will have the highest inflation in 2024, at 3.5%.
Estonia's annual inflation in November was 4%, but there was no change in the average price level month over month. The increase in the consumer price index has remained at around the same level since April.
The impact of the crises like the COVID pandemic, as well as the direct impact of high-inflation has been softened in the Baltics by people using their savings and by support from the state.
Even in the face of a turbulent inflation, households have been able to use their savings to continue consuming, and private consumption in real terms fell less than one percent in each Baltic state. Using savings now means though that it will not be possible to use them in the future to cushion any more shocks that might happen.
As household buffers have shrunk, so has their ability to soften any negative impact on the economy, and if new risks are realised, they will affect economic developments much more.
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