Inflation was driven in April by the end of energy subsidies
Economist at Eesti Pank
Data from Statistics Estonia show that inflation over the year continued to slow in April, and it stood at 13.5%. The price level was 2% higher than in the previous month. The largest part of this came from higher prices for two groups of goods, which were electricity and heat energy. Prices for natural gas and motor fuels fell at the same time though. Price pressures could be seen to be weaker for food commodities and producer prices, but not for consumer prices for food. Prices of meat products and bakery products continued to rise fast in April.
Prices were higher for electricity and heat in April because energy subsidies ended in April, adding 1.5 percentage points to the increase in those prices over the month. The price of electricity was 29% higher in April than it was in March, though it should be noted that the official price statistics refer to the price of the universal electricity service. The market price of electricity has been below the price of the universal service for four months now, and so many consumers have abandoned the universal electricity service. The consumer price index does not take such structural changes in consumption in the middle of the year into account, and so the statistics show inflation to be higher than it actually is.
Inflation will continue falling steadily throughout the whole year. It will be supported in this by falling energy prices and the easing of problems in supply chains. The decisions of the European Central Bank to raise interest rates will also have an increasing impact.
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