Research: the Euro changeover in Estonia

Estonia changed over from the kroon to the euro in January 2011. This paper analyses the inflationary effect of this event. The analysis is based on the Harmonised Indices of Consumer Prices. The difference-in-differences method is employed where the treated group is Estonia and the control group consists of the other EU member states. The estimation results imply that the inflationary impact of the euro changeover was either insignificant or small in magnitude, depending on which treatment period is considered. The acceleration in inflation mostly occurred in the second half of 2010, during the six-month period prior to the adoption of the euro. Although the actual effect of the euro changeover on inflation was modest, most Estonian citizens felt that the introduction of the new currency increased consumer prices considerably.

Read more from the Bank of Estonia research paper

The Dwelling Price Index increased in 2Q

According to Statistics Estonia, in the 2nd quarter of 2014, the Dwelling Price Index changed by 1.1% compared to the 1st quarter and by 14.5% compared to the 2nd quarter of 2013.

Compared to the previous quarter, the prices of apartments increased by 0.5% and the prices of houses by 2.5%.

Compared to the 2nd quarter of 2013, the prices of apartments have increased by 16.8% and the prices of houses by 8.8%. The prices of apartments increased in all three areas under observation: by 18.0% in Tallinn, by 17.8% in areas bordering Tallinn with Tartu and Pärnu cities and by 7.3% in the rest of Estonia.

Compared to the 1st quarter, the price index of apartments increased by 0.3% in Tallinn,

by 2.8% in areas bordering Tallinn with Tartu and Pärnu cities and decreased by 2.9% in the rest of Estonia.

The Dwelling Price Index expresses the changes in the square metre prices of dwellings purchased by households. The Dwelling Price Indices have been compiled for apartments and houses (including detached, semi-detached and terraced houses).

In the 2nd quarter of 2014, the Owner-Occupied Housing Price Index changed by -4% compared to the 1st quarter and by 10.4% compared to the 2nd quarter of 2013.

The Owner-Occupied Housing Price Index expresses the changes in the prices of the acquisition of dwellings new to the household sector and other goods and services that households purchase in their role as owner-occupiers. The index consists of four parts: acquisition of dwellings, other services related to the acquisition of dwellings, major repairs and maintenance, and insurance connected with dwellings.

The Owner-Occupied Housing Price Index is published on the base 2010 = 100. The time series starts from the first quarter of 2005; major repairs and maintenance are included from the first quarter of 2007 and insurance connected with dwellings is included from the first quarter of 2012. The annual index is calculated as the average of four quarters.

This is the first publication of the Owner-Occupied Housing Price Index by Statistics Estonia. The index will be published quarterly in accordance with the release calendar of Statistics Estonia.

Source: Statistics Estonia

The producer price index of industrial output decreased in August

According to Statistics Estonia, in August 2014, the producer price index of industrial output changed by -0.1% compared to July 2014 and by -1.0% compared to August 2013.

In August, compared to the previous month, the producer price index was more than average influenced by a decrease in prices in electricity, gas, steam and air conditioning supply and in the manufacture of fuel oils, but also by an increase in prices in mining.

Compared to August 2013, the producer price index was more than average influenced by a decrease in prices in electricity, gas, steam and air conditioning supply and in the manufacture of electronic equipment, but also by an increase in prices in the manufacture of wood and wood products and metal products.

Change in the producer price index of industrial output by economic activity, August 2014
Economic activity according to EMTAK 2008 August 2014 –
July 2014, %
August 2014 –
August 2013, %
TOTAL -0.1 -1.0
Manufacturing 0.0 -0.1
Mining 10.5 1.3
Electricity, gas, steam and air conditioning supply -5.7 -9,7
Water supply; sewerage; waste management and remediation activities 0.2 1.0

In August 2014, the export price index changed by -0.5% compared to July 2014 and by -2.6% compared to August 2013.

In August, compared to the previous month, the prices of electricity, agricultural and oil products decreased more than average, whereas the prices of parts and accessories for motor vehicles, and wood and wood products increased more than average.

In August 2014, the import price index changed by -0.7% compared to July 2014 and by -1.5% compared to August 2013.

In August, compared to the previous month, the prices of electricity, oil products and agricultural products decreased more than average, whereas the prices of leather products, wearing apparel and paper and paper products increased more than average.

Source: Statistics Estonia