Consumer prices on the rise

Consumer prices increased for the first time in a year in annual terms in May, when CPI grew by 0.2% compared with April and 0.1% compared with one year ago.

Prices increased mostly due to more expensive oil. World oil prices inched higher due to smaller stocks globally. In Estonia, motor fuels’ prices increased by 2.1% compared with April but were still 8.1% cheaper than in May last year.

Food prices declined by 0.2% in May, year on year. Global food prices reached its lowest point in five and a half years, in May, according to the FAO index. Food prices have lost a fifth of its value in a year in USD terms because of high stocks and good crops expected this season, but also because of a strong dollar.

Goods were 0.4% cheaper and services 0.8% more expensive in May, compared with last year. The prices of services have grown due to strong demand but also because of higher labour costs. Labour costs per an employee and per an hour worked increased by 3-4% in a year in the first quarter.

Modest price growth is expected in Estonia in the coming months. In addition to the low base effect from food and oil prices in the second half of last year, weaker euro should lift the prices of several imported goods. Despite some strengthening during the month, the euro was still 19% weaker against the USD in annual terms in May.

Source: Swedbank

 

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