Estonian inflation stays low

In May, consumer prices in Estonia increased by 0.1% compared with last year and also last month. Regulated prices rose by 0.3% within a year. Non-regulated prices did not change.

Biggest push came from an increase in the prices of alcohol and tobacco that were lifted by higher excise taxes. The government plans to increase alcohol excise tax also next year. The planned 15% increase in the tax rate next year would raise inflation by half a percentage point.

Consumer prices were pushed lower by cheaper mobile communication services and food. The prices of food also decreased globally. Favourable weather and improved connections lowered heating and electricity prices. The prices of motor fuels increased a bit in May as global oil price climbed because of lower stocks in the US and increased tensions in Libya.

Inflation is also modest in other countries. Euro zone inflation amounted to 0.5% in May. Low inflation was one of the reasons why the ECB decided to lower interest rates. ECB measures should lower the euro exchange rate and therefore increase the prices of imported goods and services paid in US dollars. Inflation should accelerate towards the end of the year, when macroeconomic situation is expected to improve.

Source: Swedbank


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