Prices continued to rise rapidly in September

  • Inflation is due to higher prices for food and energy and rises in excise
  • The consumer price index was 0.1% lower in September than in August because of seasonal factors

Data from Statistics Estonia show the consumer price index was up 3.7% on the year in September. Despite slowing slightly from August, inflation remained elevated because of both higher import prices and  domestic factors.

Food prices were up 7% in September and energy prices 6%, mainly because of price developments in global markets. The oil price rose to 57 dollars a barrel by the end of September, because demand for oil has recovered slightly while supply remains constrained by the agreement between OPEC members. The yearly growth in the oil price in euros has been relatively modest, because the euro has appreciated against the dollar at the same time. Around one percentage point of the inflation in the consumer basket this year has been due to rises in excise. Higher tax rates will continue to contribute to inflation of food and energy prices in the next year, but the impact of the pass-through of commodities prices should start to ease gradually.

Factors in the domestic economy have also encouraged prices to rise this year. Core inflation in manufactured goods and services, which depends mainly on domestic factors, stood at 1.3% in September. Wage growth has remained strong in Estonia, and this has induced higher production costs. Increased production volumes and a rise in the price level have together allowed companies to restore their profits again for the first time in a few years.

Inflation in the euro area remained at 1.5% in September, which is below the 2% inflation target of the European Central Bank. Inflation has been restrained by the unexpectedly low wage growth in the larger countries of the euro area  in contrast to other activity indicators of the economy. The unemployment rate has now fallen to its levels of before the crisis, and faster economic growth has also supported inflation in the euro area. Slow growth in labour costs for companies in the euro area has so far offset higher prices for other production inputs including commodities.

Inflation in Estonia and euro area

Source: Bank of Estonia

Author: Sulev Pert, Economist at Eesti Pank

Food and dwelling expenses account for 40 pct of the household budget

According to Statistics Estonia, in 2016, a household member spent an average of 408 euros per month, which is 13 euros more than in 2015. Compulsory expenditure, i.e. unavoidable food and dwelling expenses, accounted for 40% of the household budget, remaining at the level of the previous year.

In 2016, compulsory expenditure in the household budget was on average 162 euros per month per household member. Although the compulsory expenditure increased by 5 euros compared to 2015, its share in the household budget remained at the same level.

In 2016, a household member spent the most on food and non-alcoholic beverages (95 euros per month), which accounted for 23% of the total expenditure. Compared to the previous year, expenditure on food increased by 3 euros per month. Expenditure on dwelling was on average 67 euros per month, which is 2 euros more than in 2015.

Expenditure on transport was on average 50 euros, leisure time 41 euros, housekeeping 31 euros and clothing and footwear 22 euros per month per household member. Compared to 2015, of the listed expenditures, housekeeping expenses increased the most – from 26 euros to 31 euros.

Households in urban areas spent more on dwelling than households in rural areas. Per member of an urban household, dwelling expenditure was 13 euros higher than in rural areas (71 and 58 euros per month, respectively). Compared to urban households, rural households spent more on transport – in rural areas slightly more than 14% and in urban areas 11% of the household budget. While in an urban settlement, a household member spent 48 euros per month on transport, in rural settlements 54 euros was spent per month.

By county, the largest expenditures of households were in Harju, Rapla and Tartu county (459, 447 and 427 euros per month per household member, respectively) and the smallest in Ida-Viru and Põlva county (296 and 299 euros per month per household member, respectively).

The estimates are calculated according to the data of the Household Budget Survey conducted in 2016. More than 4,400 households participated in the survey. A household is a group of persons who live at the same address and share joint financial resources and whose members consider themselves to be members of one household. In 2016, there were over 592,000 households in Estonia and the average size of a household was 2.2 persons.

Mortgage payments, real estate purchases, financial investments, expenses on major repairs or construction and other investments are not taken into account as household consumption expenditure.

For the statistical activity “Household Budget Survey”, the main representative of public interest is the Ministry of Economic Affairs and Communications, commissioned by whom Statistics Estonia collects and analyses the data necessary for performing this statistical activity.

Source: Statistics Estonia

88 pct of Estonian households have internet connection

According to Statistics Estonia, 88% of Estonian households had internet connection at home in 2017. The share of households using mobile internet connection has reached 82%, increasing by four percentage points in a year.

The share of households with internet connection at home increased two percentage points compared to the previous year. Nearly nine out of ten households with internet connection had a fixed broadband connection (wired or wireless) and eight had mobile internet connection. The share of households with mobile internet connection increased four percentage points in a year. Slightly more than two-thirds of households without internet connection at home cited lack of need or interest as the main reason for not having the connection at home.

While 97% of 16–54-year-olds used the internet in the last three months, the same indicator among 65–74-year-olds was 68%. The share of internet users among 65–74-years-olds increased two percentage points in a year, reaching 53%. Nevertheless, the digital divide between the youngest (16–24-year-olds) and the oldest (65–74-year-olds) age group was 46 percentage points. 90% of internet users used the internet and 85% of them used a computer daily.

While on the move (away from home and work), 73% of internet users used the internet on a smart or mobile phone and 32% on a portable computer in the last three months. Compared to 2016, these indicators had risen seven and three percentage points, respectively. By age groups, the use of internet on the move was the highest among 16–24-year-old internet users.

In the last three months, the most popular internet activities among 16–74-year-old internet users were: using internet banking services (90%), reading media publications (90%) and using e-mail (89%). In the last 12 months, 22% of internet users booked transport service (e.g. on Taxify or Uber) and 17% booked accommodation service (e.g. on Airbnb.com) from a private person by using a website or mobile app.

In the last 12 months, 65% of internet users bought or ordered some product or service online, which is one percentage point more than a year ago. E-commerce users ordered mostly travel and accommodation services (61%) and tickets to concerts, cinema, theatre and other events (57%). Slightly more than one third (35%) of e-commerce users bought or ordered food and staple goods and a quarter bought electronic equipment online.

96% of Estonian enterprises with 10 or more employed persons used computers every day, 95% of them used the internet. Fixed broadband internet connection is used predominantly, but almost three‑quarters of enterprises also used mobile internet for work purposes. The speed of used internet connections has increased year by year. For 80% of enterprises with a fixed broadband internet connection the fastest download speed was over 10 Mbit/s. 97% of enterprises using fixed broadband internet access were satisfied with the connection.

In 2017, 15% of Estonian enterprises employed qualified information and communication technology (ICT) specialists. 8% of companies encountered difficulties recruiting ICT specialists. As the use of ICT tools is indispensable in everyday life, the continuous improvement of ICT skills is inevitable. One tenth of Estonian enterprises trained their employees in information and communication technology, 8% of companies trained ICT professionals working in the enterprise.

In 2017, 18% of Estonian enterprises sold their products or services electronically. E-commerce sales accounted for 21% of the total turnover of enterprises engaging in e-sales. The largest e‑sales users were wholesale and retail trade and accommodation and food service enterprises.The use of information technology among persons aged 16–74, households and enterprises is studied based on a harmonized methodology in all European Union Member States. Statistics Estonia studies the use of information technology in households and among inhabitants aged 16–74 annually in the 2nd quarter. From 2005 to 2013, this was part of the Labour Force Survey, since 2014 an independent survey. A household is a group of persons who live at the same address and share joint financial resources and whose members consider themselves to be members of one household. It differs from family, which is based on family relationships or kinship.

Statistics Estonia has surveyed the use of information technology in enterprises since 2001. 3,400 enterprises participated in the survey in 2017. The survey covers enterprises with 10 or more persons employed.

For the statistical activity “Information technology in households” and “Information technology in enterprises” the main representative of public interest is the Ministry of Economic Affairs and Communications.

Source: Statistics Estonia