Prices stopped falling in January after doing so for nine months
Eesti Panga ökonomist
Data from Statistics Estonia show that consumer prices in January were 0.2% higher than a year earlier. Energy prices were down by 2.5%, but prices for food, including alcohol and tobacco, were up 0.5%.
The rise in prices was driven mainly by electricity, which was up 21% and raised consumer prices by 0.7%. The price of electricity on the Nordic exchange was more than one and a half times what it was at the same time a year earlier. Increased electricity consumption raised the electricity bills of households. Consumption of electricity has been higher this year because of the cold winter, and it was 9% more in January for households and companies than a year earlier in consequence. Consumer prices for electricity have been very volatile in Estonia because the price statistics do not consider the fixed-price contracts of Eesti Energia but only the changes in the exchange price for electricity.
Motor fuels were again notably cheaper in January than a year earlier, but the oil price in US dollars on the global market has risen since November by 26%. The oil price was 6% higher at the start of February than a year previously, and that will lift inflation in the coming months. The oil price has risen because of expectations that vaccination will end the economic crisis soon, while the OPEC+ nations are not planning to increase oil production substantially.
Prices for services and manufactured goods were up only a little, rising by 0.7% on the year, because wages have grown slowly and the economy is not running at full capacity. The biggest falls in prices for services since the Covid-19 crisis started have been of 10% over the year in January for accommodation services and of 9% for rent prices. At the same time, prices for social protection and dental care have risen by around one tenth.
The Eesti Pank forecast expects that consumer price inflation will pick up gradually throughout this year and will average more than 1.4% over the year.
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