Inflation is staying high this year
Economist at Eesti Pank
Data from Statistics Estonia show the yearly growth in consumer prices to have accelerated further in September. The largest contributors over the year have been the prices of motor fuels and electricity. Inflation has also been boosted this year by dry weather in late summer, which is now affecting the prices of garden produce.
Prices of motor fuels and electricity were a tenth higher than in September last year. The price of crude oil hit a four-year high on global markets in September, though oil refining margins have narrowed and this has restrained the rise in fuel prices a little.
Dry weather has contributed to food price increases as the summer months were unfavourable for agriculture and so prices of garden produce have started to rise. The weather has also made the exchange price of electricity volatile in recent months, and over the year it was up 11%.
As the increase in energy prices has not faded, overall inflation could continue at a fast past over the rest of the year. Price pressures will be lower next year as the government decided to abandon the planned rise in alcohol excise. This will cut around half a percentage point off inflation.
Inflation in the euro area was at 2% for the fourth month in a row, as it has also been driven by the prices of oil and food.
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