Prices declined by 0.5 pct in December

• In 2014, consumer prices down by 0.1%, just like in 2009
• Prices will grow, albeit modestly, in 2015

In December, consumer prices decreased by 0.5% compared with the previous year and did not change compared with November. In December, prices were pushed down the most by cheaper motor fuels, which dropped by 14%, year-on-year, and 9%, month-on-month. Also, the prices of education, food and clothing declined.

In 2014, consumer prices changed by -0.1%. Cheaper energy, especially electricity and motor fuels, were behind lower prices.

In 2015, consumer prices are expected to show modest growth. An increase in excise tax rates will lift inflation by around 0.5 pp at the beginning of the year. The prices of imports are pushed higher by cheaper euro. Strong wage growth adds pressure on the prices of labour-intensive goods and services produced locally. The prices of motor fuels are expected to decline in 2015, but less than the global prices of crude oil in dollars, as the EUR will weaken against the USD and taxes amount to half of the retail price of gasoline. Swedbank will publish its new macro forecast at the end of January.

In November 2014, the producer prices of Estonia’s industry declined by 2.3%, year-on-year. At the same time, the import price index decreased by 5.7%, and the export price index by 3.2% compared with the same month last year. Lower prices of electronic products, electricity and oil pushed down prices in the industry.

Source: Swedbank

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