Analytics, EU – Baltic States, Foodstuff, Inflation, Lithuania, Markets and Companies

Skvernelis said the prices could be pulled down by further competition.

"Accession of a new market player (Lidl Lietuva) has had a really positive effect, however, this seems to be not enough. People of Lithuania should not expect prices for food products to be at the same level as they are in the neighboring Poland where some people go to shop – this will never be the case, as they have economy of scale. Our national economy is indeed small, furthermore, businesses often want to have a profit margin," Skvernelis told the national radio LRT on Tuesday.

"Speaking about retail trade, especially food products, the only solution here can be arrival of new competition," he added.

In the prime minister's words, a lower value-added tax (VAT) tariff on food products would not have an effect, as buyers would not fee any impact.

Skvernelis acknowledged growing prices for services and food products in stores and marketplaces.

According to data provided by Statistics Lithuania, the annual inflation stood at 3.5% in June, while average annual and monthly inflation were 2% and 0.2%, respectively.

Vitas Vasiliauskas, board chairman of the central Bank of Lithuania, said in late July that the prices may have been pulled up by the expiry of the reduced VAT tariff on heating and increase of excise duty on alcohol and tobacco in spring. He said prices would grow by an average of 2% next year.