Energy and food prices rose in May
Martin Lindpere, Eesti Pank, economist
According to Statistics Estonia, the consumer price index increased 0.2% month-on-month and 3% year-on-year in May 2010. Energy and dairy products were the main contributors to the rise in the cost of the consumer basket. This is largely the result of price increases in external markets.
The current inflation rate is relatively high against the backdrop of last year's severe recession and the current excess capacity in the economy. Prices still have room for downward adjustment. Price rise, on the contrary, may inhibit the recovery of growth.
The consumer price level of food and non-alcoholic drinks remained nearly unchanged in May. The hike in the price of dairy products (5%) was offset by the seasonal cheapening of fresh vegetables. Compared to half a year ago, food and non-alcoholic drinks are 5.5% more expensive, whereas growth is 1.2% year-on-year. The producer price of food and drinks has not changed much since summer 2009.
As regards energy carriers, the price of natural gas went up as a result of last year's oil price rise. In some towns, also thermal energy became more expensive. These price rises, along with more expensive firewood, accounted for more than a half of the month-on-month price growth.
Motor fuel retailers kept the difference between global market prices and local retail prices rather large in historical comparison.
Like in May, mobile services continued to cheapen, partly as a readjustment of the March price hike.
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