The annual rise in consumer prices remained moderate
Data from Statistics Estonia show that yearly growth in prices picked up to 1.8% in November. A similar slight rise in inflation was also felt in other euro area countries. Consumer prices in Estonia were 0.2% lower than in the previous month.
Prices are currently rising at a relatively moderate rate for the Estonian economy given that growth in the economy accelerated to 4.2% in the third quarter and wage growth reached 8%. Businesses have not passed wage rises on in full into prices, and so their mark-ups have fallen. Inflation has also been restrained by energy prices stabilising on global markets and by the cut in excise on alcohol.
It is expected that inflation will rise temporarily to above 2.5% in the first months of next year. This will be partly because of the low reference base effect for motor fuels at the start of this year. Inflation is likely to fluctuate around 2% in the second half of next year, and Eesti Pank forecast in September that the average rise in consumer prices in 2020 will be 1.9%. Eesti Pank will publish a new economic forecast for 2019–2022 on 17 December.
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