IKEA plans to expand to Estonia

Swedish furniture retail giant IKEA has not dropped plans to expand in the Baltics and is considering opening stores in Estonia and Latvia.

IKEA opened its first Baltic location in the Lithuanian capital of Vilnius in 2013 and its first years of operation have been successful, said Johannes Johannesson, a representative of IKEA’s Baltic franchise owner Felit, according to whom the opening of additional stores in Estonia and Latvia remains under consideration, although no decision had yet been made on the matter.

IKEA subsidiary IRI Investments OÜ has acquired an additional 300 hectares of land in Estonia since mid-August, 66 hectares of which consists of forested land. The company currently owns a total of 6,199 hectares of land, 5,366 hectares of which currently remains forested land.

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The turnover of retail trade enterprises increased 5 pct in a year

According to Statistics Estonia, in September 2016 compared to September 2015, the turnover of retail trade enterprises increased 5% at constant prices. Turnover has shown a stable five-percent growth for the second month in succession compared to the same month of the previous year.

In September 2016, the turnover of retail trade enterprises was 530.4 million euros.

The turnover of stores selling manufactured goods increased 9% compared to September 2015. Turnover increased in most economic activities. Only the turnover in non-specialized stores selling predominantly industrial goods (e.g. department stores) was smaller than in September of the previous year. Turnover increased the most in stores selling second-hand goods and in non-store retail sale (stalls, markets, direct sale), with sales increasing by a fifth over a year. A higher than average increase in turnover occurred also in stores selling pharmaceutical goods and cosmetics (17% growth), in sales via mail order or the Internet (13% growth) and in stores selling household goods and appliances, hardware and building materials (13% growth).

The turnover in grocery stores, which showed a small fall in August, turned upwards again in September and increased 2% compared to September of the previous year.

The turnover of enterprises engaging in the retail sales of automotive fuel stayed at the same level as in September 2015.

Compared to the previous month, in September, the turnover of retail trade enterprises decreased 6%. According to the seasonally and working-day adjusted data, however, turnover increased 1% compared to the previous month. In the nine months of 2016 (January–September), the turnover in retail trade enterprises increased 5% compared to the corresponding period of the previous year.

Diagram: Turnover volume index of retail trade enterprises and its trend

In 2016, to publish monthly statistics on retail trade, Statistics Estonia started to use only the VAT declaration data of the Estonian Tax and Customs Board and stopped data collection with the questionnaire “Turnover”. This will reduce the response burden of entrepreneurs and Statistics Estonia’s expenditure on data collection, and increase the use of administrative data. Due to the change in the data source, the monthly news release “Retail trade” will focus on the turnover of retail trade enterprises, instead of the retail sales of such enterprises. Statistics Estonia will continue publishing the retail sales indicator of retail trade enterprises on a quarterly and yearly basis. Statistics Estonia published the monthly summary in five working days.

Source: Statistics Estonia

Alcohol and tobacco prices have increased by 8.5 pct in a year

According to Statistics Estonia, the change of the consumer price index in September 2016 was 0.2% compared to August 2016 and 1.0% compared to September of the previous year.

Compared to September 2015, goods were 1.4% and services 0.4% more expensive. Regulated prices of goods and services have risen by 2.2% and non-regulated prices by 0.8% compared to September of the previous year.

Compared to September 2015, the consumer price index was influenced the most by alcoholic beverages and tobacco having become 8.5% more expensive, which was mainly due to the implementation of new excise duty rates in 2016. In this commodity group, alcoholic beverages have become 7.9% and tobacco 10.1% more expensive. Electricity, heat energy and fuels also had a bigger impact on the index, as they became 5% cheaper, with 9% cheaper heat energy accounting for almost three quarters of the drop. Compared to the period a year ago, diesel fuel was 5.2% and petrol 1.2% more expensive. Compared to September 2015, of food products, the prices of low-fat milk (9%) have decreased the most, whereas the prices of processed fruit (27%) and sugar (20%) have increased the most.

In September compared to August, the consumer price index was influenced the most by the ending of sales of clothing and footwear and the introduction of new seasonal products in stores, but also the seasonal price decrease of vegetables and fruit. Transport also had a bigger impact on the index as plane tickets bought for September were 14% more expensive than the month before.

Change of the consumer price index by commodity groups, September 2016
Commodity group Sep`t 15 – Sept 2016, % Aug`16 – Sept 2016, %
TOTAL 1.0 0.2
Food and non-alcoholic beverages 0.9 -0.4
Alcoholic beverages and tobacco 8.5 1.0
Clothing and footwear 3.6 3.1
Housing -2.2 0.2
Household goods 0.5 0.0
Health 1.3 -0.2
Transport 0.7 0.9
Communications -2.7 -0.2
Recreation and culture 0.0 -0.6
Education 5.4 0.6
Hotels, cafés and restaurants 3.7 -1.8
Miscellaneous goods and services 2.9 0.5

Source: Statistics Estonia

Taxes raised the price level in September

  • Inflation is low in Estonia, but still amongst the highest in the euro area
  • Without tax rises, prices would have remained at close to the same level as last year
  • Inflation will rise further in the coming months

The rate of increase in consumer price inflation (CPI) in Estonia climbed in September to 1% from 0.3% a month ago. Prices in Estonia were 0.2% higher than in August. The harmonised index of consumer prices (HICP), which also includes purchases made in Estonia by tourists 1, rose by 1.1% in August according to the latest available statistics, this being notably higher than the euro area average and the second highest behind only Belgium. The average inflation rate in the euro area has ranged between 0.2% and 0.4% in recent months. Prices continued to fall in eight euro area countries, or about half of them, in August.

Inflation rose in Estonia for three main reasons, which were rises in excise, state regulated prices, and the low reference base of a year ago for energy prices. Most of the growth in the consumer price index in September over the previous year came from higher excise rates for fuel, alcohol and tobacco, and the rise in those rates added 0.8 percentage point to inflation. The influence of the introduction of free services has also passed out of the calculation by now, having started in 2013 with the change to make public transport in Tallinn free of charge. The effect from the introduction of free higher education passed out this September after three years, having offset the higher inflation caused by tax rises until now. Service price inflation accelerated substantially in September 2014 from 0.2% to 1.9%.

The inflation figure is affected not only by the price changes that occur during the month, but also by the changes in the prices of goods and services 12 months earlier, which is known as the reference base effect. In the second half of last year prices for both oil and food commodities fell very quickly on global markets, but commodities have probably passed the bottom of their fall by now. The reference base effect for prices of motor fuels alone lifted inflation in Estonia by around 0.3 percentage point in August and September, and the effect will increase until the start of the new year. This means inflation will continue to rise even though the global oil price has stabilised in recent months.

1 The main difference between the HICP and the CPI is that the HICP also takes in purchases by tourists within the territory of the country. The HICP is also used as the reference value for price stability in the euro area, and allows a better comparison of changes in the price levels in different countries.

Source: Bank of Estonia

Author: Rasmus Kattai, Economist at Eesti Pank

The turnover growth of retail trade enterprises accelerated to some extent

According to Statistics Estonia, in August 2016 compared to August 2015, the turnover of retail trade enterprises increased 5% at constant prices. While in July, the turnover increased 2% compared to the same month of the previous year, then in August the growth accelerated to some extent.

In August 2016, the turnover of retail trade enterprises was 561.9 million euros. The turnover growth acceleration was influenced by the stores selling manufactured goods, where sales increased 15% compared to August 2015. The turnover increased in all economic activities. Turnover increased the most in stores selling pharmaceutical goods and cosmetics, with sales increasing slightly more than a fifth (21%). A higher than average increase in turnover occurred also in sales via mail order or the Internet (19%) and in stores selling household goods and appliances, hardware and building materials (17%). In August, the turnover in stores selling textiles, clothing and footwear, which showed a slight decline in July, turned to rise again and grew 14% compared to the same month of the previous year. After the decline in July, the turnover increased also in other specialized stores, such as stores selling computers and their accessories, books, sports equipment, games and toys etc. (12%) and in non-specialized stores selling predominantly industrial goods (e.g. department stores) (4%).

The turnover in grocery stores, which showed a stable 1% growth in the last two months, turned to fall in August and decreased 1% compared to August of the previous year.

In August, the turnover of enterprises engaging in the retail sales of automotive fuels also turned to fall and decreased 2% compared to same month of the previous year. The turnover decrease of these enterprises was partly influenced by the high reference base of August 2015 and deceleration in the price decrease of automotive fuel.

Compared to the previous month, in August, the turnover of retail trade enterprises decreased 1%. According to the seasonally and working-day adjusted data, the growth was also 1%. In the eight months of 2016 (January–August), the turnover in retail trade enterprises increased 5% compared to the corresponding period of the previous year.Diagram: Turnover volume index of retail trade enterprises and its trend

In 2016, to publish monthly statistics on retail trade, Statistics Estonia started to use only the VAT declaration data of the Estonian Tax and Customs Board and stopped data collection with the questionnaire “Turnover”. This will reduce the response burden of entrepreneurs and Statistics Estonia’s expenditure on data collection, and increase the use of administrative data. Due to the change in the data source, the monthly news release “Retail trade” will focus on the turnover of retail trade enterprises, instead of the retail sales of such enterprises. Statistics Estonia will continue publishing the retail sales indicator of retail trade enterprises on a quarterly and yearly basis. Statistics Estonia published the monthly summary in four working days.

Source: Statistics Estonia

Estonian price changes in August 2016

According to Statistics Estonia, the change of the consumer price index in August 2016 was 0.1% compared to July 2016 and 0.3% compared to August of the previous year.

Compared to August 2015, goods were 1.0% more expensive and services 0.9% cheaper. Regulated prices of goods and services have risen by 0.7% and non-regulated prices by 0.3% compared to August of the previous year.

Compared to August 2015, the consumer price index was influenced the most by both alcoholic beverages and tobacco having become 7.8% more expensive, which was mainly due to the implementation of new excise duty rates in 2016. Electricity, heat energy and fuels also had a bigger impact on the index, as they became 5.2% cheaper, with 9.5% cheaper heat energy accounting for three quarters of the drop. Compared to the period a year ago, diesel fuel was 3.2% more expensive and petrol 5.4% cheaper. Compared to August 2015, of food products, the prices of low-fat milk (12%) and whole milk (9%) have decreased the most, whereas the prices of processed fruit (27%) and sugar (24%) have increased the most.

In August compared to July, the consumer price index was influenced the most by food having become 1.4% cheaper as a result of vegetables having undergone a 12% and fruit a 6% seasonal price drop. The widespread sales of clothing and footwear having ended and 4.8% more expensive tobacco products also had a bigger impact on the index.

With one minor exception (+0.1% in May 2015), the 12-month change in the consumer price index was negative from June 2014 until July 2016.

Change of the consumer price index by commodity groups, August 2016
Commodity group August 2015 – August 2016, % July 2016 – August 2016, %
TOTAL 0.3 0.1
Food and non-alcoholic beverages 0.5 -1.4
Alcoholic beverages and tobacco 7.8 0.5
Clothing and footwear 5.3 4.3
Housing -2.4 0.1
Household goods 0.7 0.6
Health 1.7 -0.1
Transport -3.6 -0.1
Communications -1.5 -0.2
Recreation and culture 1.1 0.7
Education -13.8 0.0
Hotels, cafés and restaurants 3.7 -0.1
Miscellaneous goods and services 3.0 0.8

Source: Statistics Estonia

Turnover increased the most in stores selling second-hand goods

According to Statistics Estonia, in June 2016 compared to June 2015, the turnover of retail trade enterprises increased 4% at constant prices. While in May the turnover increased 8% compared to the same month of the previous year, in June the turnover growth decelerated.

In June 2016, the turnover of retail trade enterprises was 550.5 million euros.

The turnover growth of stores selling manufactured goods slowed down markedly in June. The turnover of those stores increased 13% in May compared to the same month of the previous year, whereas in June the growth was 6%. The turnover increased in five and decreased in two economic activities. Turnover increased the most in stores selling second-hand goods and in non-store retail sale (stalls, markets, direct sale), with sales increasing 28% over a year. The turnover increased also in stores selling pharmaceutical goods and cosmetics (14% growth), via mail order or the Internet (10% growth), in stores selling textiles, clothing and footwear (9% growth) and in stores selling household goods and appliances, hardware and building materials (8% growth). The turnover in non-specialized stores selling predominantly industrial goods (e.g. department stores) and in other specialized stores, such as stores selling computers and their accessories, books, sports equipment, games and toys etc. decreased compared to June of the previous year.

The turnover growth of enterprises engaging in the retail sales of automotive fuel also decelerated in June. While in May the turnover of those enterprises increased 6% compared to the same month of the previous year, then in June the sales remained on the level of the previous year. The turnover growth deceleration was partly influenced by the higher reference base of June 2015 and deceleration in the price decrease of automotive fuel.

The turnover in grocery stores has shown a rather stable growth in the recent months. In June, the turnover of these stores increased 4% compared to June of the previous year.

Compared to the previous month, in June, the turnover of retail trade enterprises decreased 1%. According to the seasonally and working-day adjusted data the decrease was also 1%. In the six months of 2016 (January–June), the turnover in retail trade enterprises increased 6% compared to the corresponding period of the previous year.Diagram: Turnover volume index of retail trade enterprises and its trend

In 2016, to publish monthly statistics on retail trade, Statistics Estonia started to use only the VAT declaration data of the Estonian Tax and Customs Board and stopped data collection with the questionnaire “Turnover”. This reduced the response burden of entrepreneurs and Statistics Estonia’s expenditure on data collection, and increased the use of administrative data. Due to the change in the data source, the monthly news release “Retail trade” will focus on the turnover of retail trade enterprises, instead of the retail sales of such enterprises. Statistics Estonia will continue publishing the retail sales indicator of retail trade enterprises on a quarterly and yearly basis. Statistics Estonia published the monthly summary in four working days.

Source: Statistics Estonia