Data from Statistics Estonia show that the consumer basket was 0.3% lower in price in September than in the previous month, but 3% more expensive than a year earlier.

Prices were lower in September than in August mainly because the price of crude oil fell. Motor fuels were down 5.5% over the month, which brought consumer prices down by 0.3 percentage point. Cheaper electricity also eased matters somewhat in September. Notably higher electricity prices than those in the Nordic countries have placed an additional burden on the Estonian economy this year.

Inflation for food products has accelerated, and it has risen over a couple of months to close to 5%. Inflation has so far been limited mainly to some individual food items that have become more expensive, as the retail prices of coffee, juice and butter for example have reacted strongly to price rises on global markets. Fruit also rose in price in September, probably in response to unfavourable weather conditions, as there is normally a seasonal fall in the price of fruit at this time of year. The general strengthening of price pressures in the food segment is also indicated by the rapid rise in the prices of agricultural imports in recent months. It is highly probable that this will keep food price inflation high in the coming months.

Service price inflation was high in September at 7.1%. The price of services is largely dependent on wages, but the data for August ran counter to expectations as they showed no indication of the growth in wages slowing from its rate of 8%. Inflation for manufactured goods has remained relatively low though. The euro exchange rate has made goods imported from abroad cheaper, as the euro has been the strongest it ever has against the currencies of trading partners. Although households have in general little confidence to spend, their consumption decisions may be influenced by the motor vehicle tax that will apply from the new year. Increased demand may revive the market for cars at the end of this year, and prices for cars may rise faster.

The most recent Eesti Pank forecast expects consumer price inflation will be 3.5% this year.

Additional information:
Hanna Jürgenson
Communications Specialist
Eesti Pank
Tel: 5692 0930
Press enquiries: [email protected]