Prices continued to fall in August

Sulev Pert
Economist at Eesti Pank

Data from Statistics Estonia show that consumer prices were 0.9% lower in August than a year earlier. Consumer prices fell for the fifth consecutive month. Prices were down because prices fell for energy and services. Food price inflation is slowing steadily, and is being held up by the prices of fruit and meat products.

Prices for services fell even further in August and the annual drop was the largest since the financial crisis a decade years ago. Services were cheaper as the tourism sector was hit hard by the coronavirus. Accommodation services were 24% cheaper than a year earlier, while prices at restaurants rose more slowly and the earlier rapid rise in prices of package holidays ended. Rent prices were 14% lower than a year earlier.

Consumer prices in the euro area started to fall in August, as they were down 0.2% over the year. There is great uncertainty about how the economy will perform in the months ahead as the crisis is not yet over. Consumers remain cautious and this will rein back price rises in the coming months.

Eesti Pank will publish its next inflation forecast at the end of September.


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