In March petrol was 18.5 pct more expensive than last year

According to Statistics Estonia, the change of the consumer price index in March 2017 was 0.3% compared to February 2017 and 2.8% compared to March of the previous year.

Compared to March 2016, goods were 3.2% and services 2.1% more expensive. Regulated prices of goods and services have risen by 5.9% and non-regulated prices by 2.0% compared to March of the previous year.

Compared to March 2016, the consumer price index was affected the most by the price increase of motor fuel. Compared to March of the previous year, diesel was 19% and petrol 18.5% more expensive. Almost an equal impact on the index was caused by the 4% increase in the prices of food and non-alcoholic beverages, of which 2/7 were contributed by milk, dairy products and eggs, 1/7 by sugar and confectionery, and another 1/7 by fish and fish products. Of food products, the biggest price increases were seen for potatoes (25%), fresh fish (24%) and sugar (20%).

In March, compared to February, the consumer price index was affected the most by a 1% increase in the prices of food and non-alcoholic beverages, of which more than half were contributed by 3.4% more expensive vegetables and 3.3% more expensive fruit. The end of winter sales of clothing and footwear and the 3.8% price decrease of electricity that arrived at homes also had a significant impact on the index.

Change of the consumer price index by commodity groups, March 2017
Commodity group March 2016 – March 2017, % February 2017 – March 2017, %
TOTAL 2.8 0.3
Food and non-alcoholic beverages 4.0 1.0
Alcoholic beverages and tobacco 6.3 0.8
Clothing and footwear 3.2 3.3
Housing 1.1 -0.9
Household goods 0.1 -0.4
Health 1.3 -0.6
Transport 6.6 0.0
Communications -2.2 -0.3
Recreation and culture -0.4 0.9
Education 2.8 0.0
Hotels, cafés and restaurants 4.7 0.4
Miscellaneous goods and services 1.3 -1.4

Source: Statistics Estonia


The exports of goods of Estonian origin grew 9 pct in February

According to Statistics Estonia, in February 2017, the exports of goods increased by 6% and imports by 1% compared February 2016. In February, the exports of goods of Estonian origin grew 9%, while re-exports stayed at the same level as one year ago.

In February 2017, exports from Estonia amounted to 1 billion euros and imports to Estonia to 1.1 billion euros at current prices. The trade deficit was 97 million euros (in February 2016, it was 140 million euros).

The top destination countries of Estonia’s exports in February were Finland (16% of Estonia’s total exports), Sweden (14%) and Latvia (8%). The biggest increase occurred in exports to the Netherlands (up by 27 million euros, i.e. two-fold), Russia (up by 17 million euros) and China (up by 12 million euros). These rises are mainly due to increased exports of mineral products to the Netherlands, of mechanical appliances to Russia and of electrical equipment to China. Exports to Sweden decreased the most.

The biggest share in exports was held by electrical equipment, followed by wood and articles of wood and mineral products. The increase in exports was affected by the exports of mineral products (up by 32 million euros), mechanical appliances (up by 27 million euros), and raw materials and products of chemical industry (up by 14 million euros). There was a decrease in the exports of electrical equipment.

The share of goods of Estonian origin in total exports was 75%. The rise in the exports of goods of Estonian origin was affected the most by an increase in the exports of minerals products (incl. shale oil), mechanical appliances (incl. machine tools for working wood, packing machinery) and wood and articles of wood (incl. softwood saw-timber, wood pellets, wood in chips). Goods of Estonian origin are exported the most to Sweden, Finland and the Netherlands. The biggest increase in the exports of goods of Estonian origin was in the exports to the Netherlands (up by 28 million euros) and the biggest decrease in the exports to Sweden (down by 43 million euros).

The main countries of consignment in February 2017 were Finland (13% of Estonia’s total imports), Germany (11%), Sweden (9%) and Lithuania (9%). The biggest increase occurred in imports from Russia (up by 22 million euros) and Denmark (up by 10 million euros), while imports from Hungary decreased the most (down by 26 million euros).

In February, the main commodities imported to Estonia were electrical equipment, mineral products, mechanical appliances, agricultural products and food preparations, transport equipment and raw materials and products of chemical industry. The biggest increase was in the imports of mineral products (incl. motor spirit) and the biggest fall occurred in the imports of electrical equipment.

In February 2017, foreign trade export volume index decreased by 14% and import volume index increased by 3% compared to the same period of the previous year.Estonia’s foreign trade by month, 2015–2017

Read more from Statistics Estonia

Core inflation remains low in Estonia

  • Oil and foodstuffs were cheaper on global markets in March than in February
  • Core inflation remains low in Estonia and the euro area

Data from Statistics Estonia show that consumer price inflation slowed to 2.8% in March from 3.4% a year earlier. The price level was 0.3% higher than in the previous month. Energy prices were up 7% over the year and prices for foodstuffs, including alcohol and tobacco were up 4.5%, while core inflation remained low at 1%.

Price pressure weakened a little on the world market in March, and that was reflected in Estonian consumer prices too. The crude oil price was down at the start of March on world markets as oil production increased in the USA, offsetting the earlier production limits introduced by OPEC countries. Food commodities were also cheaper in March than in February, with data from the UN’s Food and Agriculture Organization (FAO) showing prices down 2.3%. Cheaper oil had an immediate impact on Estonian consumer prices as motor fuels fell in price by 1.3% over the month. Rises and falls in food commodities on world markets usually pass through into Estonian prices over three quarters.

Around half of the rise in food prices, or two percentage points, was due to the rise in excise on alcohol and tobacco at the start of this year. As companies built up big stocks at the end of last year, the tax impact of this rise has so far passed through into consumer prices more slowly than the rise last year did. For this reason it may be assumed that the excise rise will affect prices further in the months ahead.

Average inflation in the euro area slowed in March from 2% to 1.5%, partly because of the low rate of core inflation. Core inflation is an important figure for monetary policy, as it is observed together with other key indicators for the economy. Core inflation in the euro area, from which the volatile prices of energy and food are excluded, slowed mainly because of manufactured goods. These fell further in price in several larger euro area countries even as the prices of raw materials and the intermediate goods used in manufacturing were up on the year. As core inflation is dependent on economic activity, and surveys indicate a continued increase in economic activity in the euro area, it may be assumed that core inflation will rise during the year.

Inflation in Estonia and euro area

See better graph on Bank of Estonia website here

Author: Sulev Pert, Economist at Eesti Pank