Eesti Pank forecasts this year’s inflation to be 3.9 pct

According to Statistics Estonia, the CPI increased 0.2% in July compared to June. Year-on-year, inflation slowed to 3.6%. Euro area July inflation remained at 2.4%, according to preliminary estimates.

Annual price growth was smaller in July than in the first half of the year. This was due to the seasonal discounts on clothing and footwear, which were larger than in several previous years. As a result, inflation slowed to 1.5% in July, irrespective of the continuously rapid price growth of services. Accommodation and holiday trips have become more expensive in recent months owing to a pickup in tourism.

Developments in external markets were characterised by the price hike of several commodities, especially crude oil and cereals. The price of crude oil (in euro) went up by 7% over the last two weeks of July. Some of the price increase of motor fuels will pass through to the August statistics on consumer prices. Food commodities in the global market got more expensive due to unfavourable weather conditions and this will pass through to consumer prices over a longer period of time.

Eesti Pank forecasts this year’s inflation to be 3.9%.

Author:  Natalja Viilmann, Eesti Pank, economist
Source: Bank of Estonia