Price growth will not be slowing down this year
Economist at Eesti Pank
Statistics Estonia says that the consumer basket in Estonia was 3.6% more expensive in August than it was a year ago. Higher oil price and rapid wage growth raise prices in general. As the summer was unfavourable for farmers, food prices may go up as winter draws nearer.
The oil price began rising on global markets in mid-2017, and the effect of it is seen more and more in the Estonian consumer price index. Demand for oil grows due to faster global economic growth, but since the agreements made by oil-producing countries limit supply, the price of oil has gone up. Other energy prices have also risen with the price of oil: electricity, solid fuels, natural gas and heating energy were on average 9.3% more expensive in August year-on-year.
Increases in the price of the consumer basket have over the past months been subdued by the lower price of food on global markets, which is why the annual growth in food prices has slowed in Estonia as well, to 1.8%. Food price inflation may not remain slow, however, because droughts in the summer may push food prices up again in Estonia and elsewhere in Europe.
The Estonian consumer basket was 3.6% more expensive this August than it was a year ago, but the average growth of consumer prices has remained close to 2% in the euro area over recent months.
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