Martin Lindpere, Eesti Pank, economist

According to Statistics Estonia, the change of the consumer price index was 0.7% in January 2012 compared to December 2011, and 4.5% compared to January 2011. Euro area inflation was 2.7%, according to Eurostat's preliminary estimate.

Estonia's inflation is mostly attributable to the price increase of electricity, natural gas, thermal energy and motor fuel, which accounted for 0.6 pp of the total price growth in January.

Energy inflation was offset by seasonal discounts, which were slightly larger than in previous years. For instance, the price of apparel and footwear decreased by 4.2% and 3.1%, respectively. Since 2003, these goods have cheapened by an average of 3.6% and 2.6% in January, whereas in the euro area the price decline has even exceeded 10% in recent years.

The prices of pre-school establishment services hiked by 13.7% in January, posting one of the largest increases in the past decade. In addition, the cost of ordering and purchasing print media went up by 1.5% and 3.1%, respectively.

Although the Tallinn sales tax ceased to be applied at the start of the year, its disappearance is hardly noticeable in price statistics. This shows that temporary taxes tend to have a permanent impact on the price level.

Inflation is expected to slow also in the coming months. Eesti Pank forecasts the 2012 average HICP growth to be 2.8%.