Inflation has passed its peak
Consumer price inflation in Estonia in November was 3.4%. It hit a peak of 4.4% in October and has shown signs of coming down over several months. The rate of inflation fell primarily because crude oil prices fell on global markets, which meant that the rate of rise in prices for motor fuels came down over the month from 20% to 9%.
Prices for food goods have not gone up by much over the year and the impact of earlier price rises has gradually faded. Drought has left the harvest in agriculture smaller throughout Europe, but current data indicate that food price inflation could be mild in the coming months. Data from the Food and Agriculture Organization (FAO) of the United Nations show prices for food commodities on world markets have fallen steadily in the second half of 2018.
Inflation in the euro area was down to 2% in November. Estonian inflation has on average been 1.7 percentage points higher than in the euro area this year. The main cause of higher inflation in Estonia has been the rise in excises, which contributed 0.6 percentage point of inflation. Prices for services have also risen notably faster in Estonia because of fast wage growth.
Inflation will average 3% in 2018, but next year it will be below 3%. Eesti Pank will publish a new economic forecast on 19 December.
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