What: The Baltic countries are experiencing inflation rates that would not be acceptable in other parts of Europe.

Why it is important: They might only experience before the others what is next for all. The worrying part is that Baltic countries have built-in psychological and structural cushions that might miss in other European countries. For that reason, 2023 will be long and difficult both in terms of economy but also politics.

In the Baltics, inflation has reached considerable peaks when compared to the rest of Europe. In Lithuania for instance, inflation reached 21%, which significantly impacted retail activity. It is believed that Baltic countries are canaries in the coal mine when it comes to inflation and Europe, as the three countries might experience what is coming next for other European countries.

Baltic countries already have experience of inflation, and the memories of the forced occupation by the Soviet Union makes the pill easier to gulp. The rest of Europe might not have the same feelings and the shock could be more important. 10% inflation in the rest of Europe could be as impactful and difficult as the current 20% rate in the Baltic countries. Economists are worried that the current levels of inflation might leave permanent marks on the economy.

Inflation in the Baltics, a warning for the rest of Europe