Inflation picked up temporarily in January

According to Statistics Estonia, the change of the consumer price index was 0.7% in January 2012 compared to December 2011, and 4.5% compared to January 2011. Euro area inflation was 2.7%%, according to Eurostat’s preliminary estimate.

Estonia’s inflation is mostly attributable to the price increase of electricity, natural gas, thermal energy and motor fuel, which accounted for 0.6 pp of the total price growth in January.

Energy inflation was offset by seasonal discounts, which were slightly larger than in previous years. For instance, the price of apparel and footwear decreased by 4.2% and 3.1%, respectively. Since 2003, these goods have cheapened by an average of 3.6% and 2.6% in January, whereas in the euro area the price decline has even exceeded 10% in recent years.

The prices of pre-school establishment services hiked by 13.7% in January, posting one of the largest increases in the past decade. In addition, the cost of ordering and purchasing print media went up by 1.5% and 3.1%, respectively.

Although the Tallinn sales tax ceased to be applied at the start of the year, its disappearance is hardly noticeable in price statistics. This shows that temporary taxes tend to have a permanent impact on the price level.

Inflation is expected to slow also in the coming months. Eesti Pank forecasts the 2012 average HICP growth to be 2.8%.

Auhtor: Martin Lindpere, Eesti Pank, economist

Source: Bank of Estonia

Electricity, heat energy and fuel make life expensive

According to Statistics Estonia, in January 2012 compared to December 2011, the change of the consumer price index was 0.7% and compared to January of the previous year 4.5%.

Goods were 3.7% and services 6.0% more expensive compared to January 2011.

Regulated prices of goods and services have risen by 9.2% and non-regulated prices by 2.9% compared to January of the previous year.

Compared to January 2011, the consumer price index was mainly influenced by housing expenditures, which gave over 40% of the total increase. Of which in turn over three fourths gave 14.3% more expensive electricity, heat energy and fuels. Food and non-alcoholic beverages gave more than a fifth of the total increase of the index, of which a half was counted by 8.5% more expensive meat products. 10.4% more expensive motor fuel gave an eighth of the total increase. Compared to the same period a year ago, the prices of the following food products have increased the most: vegetable oil (27%), coffee (26%), and sugar (26%). In January 2012, potatoes were 33% and fresh vegetables 12% cheaper than a year earlier.

In January compared to December, the consumer price index was mainly influenced by the 3.5% price increase of electricity, heat energy and fuels; as well as seasonal sales of clothing and footwear and 3.3% price increase of motor fuel. Thereby the increase in renewable energy fee and prices of network services were the main reason for the 4.4% of price increase of electricity. The prices of heat energy increased by 2.9% and gas by 10.6%.

Statistics Estonia updates the weights system of the consumer price index and the representative goods every year. In 2012, the weights system of the consumer price index corresponds to the average expenditure structure of the population in 2011. The base prices used for calculations are December prices of the year 2011. To ensure the comparability with the previous periods, the consumer price index is continued to be published on the base 1997 = 100. The linking month is December 2011.

The table presents the expenditure structure (weights) used in 2011, as well as the expenditure structure used since January index of 2012.

Consumer price index by commodity groups, January 2012
Commodity group Weight 2011, ‰ Weight 2012, ‰ December 2011 –
January 2012, %
January 2011 –
January 2012, %
TOTAL 1000.0 1000.0 0.7 4.5
Food and non-alcoholic beverages 242.1 237.5 0.8 4.0
Alcoholic beverages and tobacco 77.7 79.1 0.9 4.4
Clothing and footwear 54.1 50.5 -3.8 3.6
Housing 177.3 171.5 2.3 10.8
Household goods 44.9 49.8 0.0 2.1
Health 41.2 37.8 0.7 1.8
Transport 132.2 146.6 1.0 4.8
Communications 49.0 49.8 -0.3 -6.1
Recreation and culture 81.3 79.1 0.1 1.3
Education 17.2 16.6 4.1 5.4
Hotels, cafés and restaurants 31.6 33.0 0.1 7.5
Miscellaneous goods and services 51.4 48.7 -0.3 2.7
Source: Statistics Estonia