The consumer price index decreased in August

According to Statistics Estonia, the change of the consumer price index in August 2014 was -0.3% compared to July 2014 and -0.7% compared to August of the previous year.

Compared to August 2013, goods were 0.7% and services 0.8% cheaper.

Regulated prices of goods and services have fallen by 0.7% and non-regulated prices have also fallen by 0.7% compared to August of the previous year.

Compared to August 2013, the consumer price index was influenced the most by electricity, heat energy and fuels, whereas the electricity that arrived at homes was 7.6% cheaper and heat energy was 3.9% cheaper. 20% cheaper vegetables, 2.7% more expensive alcoholic beverages and 6.3% more expensive tobacco also had a bigger impact on the index. Motor fuel was 3.5% cheaper than in August of the previous year. Compared to August 2013, of food products, the prices of conserved milk have increased the most (19%) and the prices of sugar and apples have decreased the most (37% and 31%, respectively).

In August compared to July, the consumer price index was mainly influenced by the 21% price decrease of fresh vegetables. The end of the sales of clothing and footwear and 2.4% cheaper motor fuel also had a bigger impact on the index. Compared to July, of food products, the prices of sweet pepper and tomatoes decreased the most (45% and 38%, respectively) and the prices of Chinese cabbage increased the most (19%).

Source: Statistics Estonia

Change of the consumer price index by commodity groups, August 2014
Commodity group August 2013 –
August 2014, %
July 2014 –
August 2014, %
TOTAL -0.7 -0.3
Food and non-alcoholic beverages -1.7 -1.2
Alcoholic beverages and tobacco 3.7 -0.2
Clothing and footwear 1.4 4.0
Housing -2.1 -0.4
Household goods 0.8 0.2
Health 2.8 -0.2
Transport -2.7 -0.8
Communications -3.8 0.4
Recreation and culture 1.7 0.1
Education -14.4 0.0
Hotels, cafés and restaurants 3.2 -0.9
Miscellaneous goods and services 1.8 0.2

The growth in retail sales accelerated

According to Statistics Estonia, in July 2014 compared to July of the previous year, the retail sales of goods of retail trade enterprises increased 10% at constant prices. Retail sales increased 4% in May and 7% in June compared to the corresponding month of the previous year, whereas in July the retail sales growth accelerated even more.

In July 2014, the retail sales of goods of retail trade enterprises were 448.7 million euros, which was 341 euros per inhabitant. The retail sales in stores selling manufactured goods increased 13% compared to July 2013. Sales increased in most economic activities. Only the retail sales in non-specialized stores selling predominantly industrial goods (e.g. department stores) were 12% smaller than in July of the previous year. In July, the retail sales via mail order or the Internet increased the most (30% growth). A higher than average increase occurred also in stores selling textiles, clothing and footwear (27% growth), in other specialized stores, such as stores selling computers and their accessories, photography supplies, books, sports equipment, games and toys, flowers, plants etc. (19% growth), and in stores selling pharmaceutical goods and cosmetics (14% growth).

In July, the growth rate of retail sales in grocery stores accelerated markedly. In May and June the retail sales of those stores increased 3–4% compared to the same month of the previous year, while in July the growth was 7%. The growth in the retail sales of grocery stores was influenced by the discount sales campaigns that took place in July and by the acceleration of the price decrease of food products. The annual price decrease of food products was 0.3% in June, but 2% in July.

The retail sales of automotive fuel increased 9% at constant prices compared to July 2013.

Compared to the previous month, in July the retail sales in retail trade enterprises increased 6% at constant prices. According to the seasonally and working-day adjusted data, the increase was 3%. During the seven months (January–July) of 2014, the retail sales in retail trade enterprises increased 6.5% at constant prices compared to the corresponding period of the previous year.

In July, the turnover of retail trade enterprises was 530.6 million euros, out of which the retail sales of goods accounted for about 85%. Compared to July 2013, the turnover increased by 8% at current prices. Compared to the previous month, this indicator increased 4%.

Retail sales volume index of retail trade enterprises and its trend,
January 2004 – July 2014 (2010 = 100)

Diagram: Retail sales volume index of retail trade enterprises and its trend

Source: Statistics Estonia

UK’s largest sporting retailer opens a store in Tallinn

Sports Direct International plc, a British retailing giant that is known for its low margins, will open its first store on 1,600 sqm in Tallinn in Ülemiste Shopping Centre at the end of October, writes Äripäev.
Remi Aare, Baltic area manager of Sports Direct, said that the store will be offering same prices as in UK.

Guido Pärnits, board member of Ülemiste Shopping Centre, said that the company took advantage of the fact that the mall was expanding, becoming the anchor tenant in the newly-built section.

„While many retailers are trying to add e-commerce to their retail business, Sports Direct is supporting its e-commerce with physical stores,” said Pärnits.

Read more from BBN

The prices of potato and sugar have decreased the most

According to Statistics Estonia, the change of the consumer price index in July 2014 was –0.2% compared to June 2014 and –0.4% compared to July of the previous year.

Goods were 0.7% cheaper compared to July 2013 and services were 0.1% more expensive.

Regulated prices of goods and services have risen by 0.3% and non-regulated prices have fallen by 0.7% compared to July of the previous year.

Compared to July 2013, the consumer price index was influenced the most by 23% cheaper vegetables. 2.9% cheaper electricity, heat energy and fuels, 13% cheaper mobile communication services, and alcoholic beverages and tobacco, the prices of which have increased 2.1% and 6.2%, respectively, also had a bigger impact on the index. In July, compared to July 2013, motor fuel was 0.6% more expensive. In comparison with the same time of the previous year, of food products, the prices of conserved milk have increased the most (15%) and the prices of potato and sugar have decreased the most (42% and 32%, respectively).

In July, compared to June, the consumer price index was influenced the most by widespread sales of clothing and footwear. The 2.9% more expensive electricity that arrived at homes and nearly 10% cheaper fresh vegetables also had a bigger impact on the index. Compared to June, of food products, the prices of Chinese cabbages and fresh cabbages decreased the most (42% and 26%, respectively) and the prices of strawberries increased the most (22%).

Change of the consumer price index by commodity groups, July 2014
Commodity group July 2013 –
July 2014, %
June 2014 –
July 2014, %
TOTAL -0.4 -0.2
Food and non-alcoholic beverages -2.0 -0.5
Alcoholic beverages and tobacco 3.2 -0.4
Clothing and footwear -0.1 -4.7
Housing -0.5 1.2
Household goods 0.7 0.0
Health 2.6 0.3
Transport -1.3 0.0
Communications -5.9 -0.6
Recreation and culture 2.3 0.0
Education -14.3 0.0
Hotels, cafés and restaurants 3.6 0.4
Miscellaneous goods and services 2.3 0.0

 

Source: Statistics Estonia

The growth in retail sales accelerated

According to Statistics Estonia, in June 2014 compared to June of the previous year, the retail sales of goods of retail trade enterprises increased 7% at constant prices. While in May retail sales increased 4% compared to the same month of the previous year, then in June the retail sales growth accelerated to some extent.

In June 2014, the retail sales of goods of retail trade enterprises were 427.6 million euros, which was 325 euros per inhabitant. The retail sales growth in stores selling manufactured goods, which decelerated markedly in May, accelerated again in June and sales increased 14% during the year. The acceleration of retail sales growth in stores selling manufactured goods was partly influenced by the very low reference base of June of the previous year. In June, the retail sales increased in most economic activities. Only the retail sales in non-specialized stores selling predominantly industrial goods (e.g. department stores) and the retail sales of second-hand goods in stores and non-store retail sale (stalls, markets, direct sale) were smaller than in June of the previous year. The retail sales via mail order or the Internet increased the most, with retail sales increasing by a fourth (25%). The retail sales increased also in stores selling textiles, clothing and footwear (19% growth), in stores selling household goods, appliances, hardware and building materials (18% growth), in other specialized stores, such as stores selling computers and their accessories, photography supplies, books, sports equipment, games and toys, flowers, plants etc. (17% growth) and in stores selling pharmaceutical goods and cosmetics (15% growth).

The retail sales in grocery stores have been rather stable during the last two months. In June, the retail sales in grocery stores increased 3% compared to June of the previous year.

The retail sales of automotive fuel increased 4% at constant prices compared to June 2013.

Compared to the previous month, in June the retail sales in retail trade enterprises increased 1% at constant prices. According to the seasonally and working-day adjusted data, however, the retail sales stayed at the same level compared to the previous month. During the six months (January–June) of 2014, the retail sales in retail trade enterprises increased 6% at constant prices compared to the corresponding period of the previous year.

In June, the turnover of retail trade enterprises was 506 million euros, out of which the retail sales of goods accounted for nearly 85%. Compared to June 2013, the turnover increased by 9% at current prices. Compared to the previous month, this indicator increased 1%.

Retail sales volume index of retail trade enterprises and its trend, January 2004 – June 2014
(2010 = 100)

Diagram: Retail sales volume index of retail trade enterprises and its trend

 

Source: Statistics Estonia

Maxima builds a huge logistics center

Retail chain Maxima is building one of Estonia’s largest logistics centers, taking up 45,000 square meters of space, and providing work for 350 people.

The purpose of the logistics center is to create a central storage complex, which will service all Maxima stores across Estonia. The total area of the center encompasses around 45,000 square meters, which will make it one of Estonia’s biggest logistics buildings.

Dry, cold and container storage areas will be built in the complex alongside with 130 docks to move goods. These platforms will service around 300 deliveries daily. The project is expected to cost around 30 million euros.

Work on the center began this week in Harju County and is planned for completion in December 2015.

Source: ERR News

Prices temporarily declined compared to last year

Data from Statistics Estonia show that prices did not change for consumers during June but they were 0.4% lower than a year earlier. The main reason for the fall in prices was that electricity was 13% cheaper than a year earlier. The price of electricity hit a record peak last June as generation capacity in the Baltic states was restricted by interruptions to supply, but in June this year the electricity price on the power exchange was one of the lowest ever recorded. Prices also fell for fruit and vegetables and for communications services.

Preliminary assessments show that inflation in the euro area stood at 0.5% in June, which was the lowest for several years. Although inflation is picking up in the euro area, it will remain modest as economic activity there is only growing slowly. Low price pressures in the external environment and lower prices for imported goods contributed a significant amount to the fall in Estonian prices, with durables that mostly include imports falling in price by 3.6% in June. An exception was motor fuels, which rose in price by 0.8% as global oil prices started to rise in response to geopolitical tensions. The oil price in euros has been stable since 2011, fluctuating within a narrow range of 80-90 euros a barrel.

Although falling prices generally hinder economic growth, the effect this time is rather the opposite, as falling prices driven mainly by energy prices favour both households and companies. Falling prices reduce economic activity if the fall continues for a long time as they can cause consumption decisions to be postponed. The current fall in prices will prove only temporary because inflation will pick up in the second half of the year as energy prices stop falling and food prices rise more quickly. Eesti Pank’s forecast expects that prices will rise by 0.8% in 2014.

Source: Bank of Estonia

Author: Rasmus Kattai, Head of the Economic Policy and Forecasting Division, Eesti Pank

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