Inflation is being kept up by the broadly based rise in prices for services

Autori Sulev Pert pilt

Sulev Pert

Economist at Eesti Pank



Consumer prices were 2.9% higher than a year earlier in May, while the price level was 0.1% higher than in April. Energy prices were 4% lower in May than a year earlier while food prices were up 3%, but core inflation without volatile energy and food prices was 4.9% in May. Around half of inflation this year has come from tax rises, while the remainder of it has mainly come from a broad rise in the prices of services. Inflation for services has been higher in Estonia than in the euro area in recent months.

Prices for services rose by 5.1% in first five months of this year, which covers both private sector prices and administratively regulated prices. Prices for medical services and transport services have risen most over the year, and these are generally changed at the start of the year. Prices for mobile communications packages also rose in March, while the seasonal rise in prices for tourism services started in April.

An exception among services has so far been rental prices, which have been falling for almost a whole year because there has been little activity in the real estate market. Inflation for services has been abetted by rapid wage rises and increases in the minimum wage and in pensions. The price of water in Tallinn will also rise in July.

Inflation will start to rise again in the second half of the year. Lower prices for energy and food have so far offset higher taxes and labour costs to some degree, but prices for various commodities are emerging from their slumps and inflation will also receive a strong upwards push as growth in the economy accelerates.

Additional information:
Hanna Jürgenson
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