Businesses need to be ready for the new 20-euro banknotes

On 25 November, the central banks of the euro area, including Eesti Pank, will release a new €20 banknote into circulation with a new design and security features. So that the new note can enter smoothly into circulation, it is important for companies to update their cash handling equipment in good time, and to know about the new features of the notes.

The most eye-catching change to the twenty-euro notes of the new series is a completely new security feature, a transparent portrait window on the right of the note on the hologrammic strip. Looking at the note against the light reveals a portrait of Europa in the window. The other security features – the watermark portrait of Europa and the hologrammic strip, the emerald green number, and the short raised lines on the edge of the note – are like those on the five and ten-euro notes of the new series.

Paying with the new banknotes will be simple and straightforward a long as merchants update their cash-handling equipment and authentication devices. To do this they will need to contact their equipment suppliers.

“All retailers have to accept circulating banknotes that are legal tender. If the cash authentication device is broken or needs updating, it is still possible to check the authenticity of notes using the feel, look, tilt method”, said Rait Roosve, Head of the Cash and Infrastructure Department at Eesti Pank.

Eesti Pank is organising training events about the new banknotes for cash handlers in Tallinn, Tartu, Pärnu and Narva in October and November. Details of the training events and registration information can be found in Estonian on the Eesti Pank website.

More detailed materials on the security features of the banknotes, with pictures and videos can be found on the website

In addition to this, the European Central Bank will send all cash handlers in Estonia a booklet on the new twenty-euro note in October. The booklet can also be ordered from Eesti Pank (, 6680 719).

The European Central Bank has published a list of devices that can authenticate the banknotes of the new series, including the twenty-euro note, on its website (

Source: Bank of Estonia

Japanese retail giant buys Estonian co

The Japanese retail and wholesale group Rakuten has acquired 100 percent of, a startup founded in Estonia and now headquartered in London that develops “virtual fitting rooms,” Techcrunch reported.

Rakuten plans to run as a standalone business, where it will continue to develop its technology, grow its business and work with existing clients. The latter includes Thomas Pink, Hugo Boss and home shopping channel QVC.

James Gambrell  will stay on as CEO of the 65-person company, which still lists co-founders Heikki Haldre and Paul Pallin as active employees. offers two-way technology that lets online buyers who cannot physically try something on better visualize how those items might fit them, and lets retailers collect more information about the preferences and interests of visitors to their sites.

“Not only does the virtual fitting room provide customers with a more realistic shopping experience, it also empowers merchants with the valuable data they need to continually improve their service,” Rakuten’s CEO and founder Hiroshi Mikitani said in a statement, describing the acquisition as a natural complement to Rakuten’s growing portfolio of e-commerce and marketing services.

Techcrunch said Rakuten has been on a buying and investment spree in the last couple of quarters, which most notably included a 530 million U.S. dollar round of funding for Lyft in March and the launch of a share offering in June to raise 1.5 billion dollars to help finance some of that activity.

Prior to Rakuten buying, the company, founded in 2010, was in the process of raising a round of funding specifically looking for strategic investors to complement the 14.3 million U.S. dollars it had already received from Gambrell, Conor Venture Partners, Entrepreneurs Fund, SmartCap and a number of others.

With consolidated sales of 598.6 billion yen (4.36 billion euros) and a net profit of 70.6 billion yen (515 million euros) in 2014, Rakuten ranks as one of the biggest retailers globally.

Source: BNS

Tallinn’s restrictions on hard liquor sale affects 200 stores

Alcohol sale restrictions which, among other things, ban strong alcohol sales in small stores in Tallinn as of July 1 will affect about 200 stores or a third of the total number of stores selling liquor in the Estonian capital city.

According to a spokesperson for the Tallinn Enterprise Board, Aave Jurgen, in October 2014 the number of stores selling alcoholic beverages was 600 in Tallinn and about 200 of these did not have a total area of 150 square meters or more which is needed according to the new law. She added that by today the number may have changed but not by much.

Jurgen said that the city is to definitely exercise supervision.

According to Jurgen the aim of the restriction is to somewhat limit access to hard liquor.

As of July 1 retail sale of alcohol will be banned in shops whose entrance is situated within 50 meters of the main entrance of a basic school, high school or vocational school. It will also be illegal to sell alcohol in buildings situated in the territory of gas stations and alcohol will be sold in specially designated areas at sports events. Where under the present regulation hard liquor can be sold in shops with a total area of at least 75 square meters, as of July 1 the minimum area requirement will be increased to 150 square meters.

Source: Baltic News Service via Estonian Review

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


Change in consumer prices in May

According to Statistics Estonia, the change of the consumer price index in May 2015 was 0.2% compared to April 2015 and 0.1% compared to May of the previous year.

Compared to May 2014, goods were 0.4% cheaper and services 0.8% more expensive. Regulated prices of goods and services stayed at the same level and non-regulated prices have risen by 0.1 % compared to May of the previous year.

Compared to May 2014, the consumer price index was influenced the most by motor fuel, which was 8.1% cheaper this year. Alcoholic beverages also had a bigger impact on the index, as their prices increased by 5.4% compared to May 2014. Compared to May of the previous year, of food products, the prices of dried fruit and nuts (33%) and coffee (19%) have increased the most, while the prices of potatoes (25%) and sugar (24%) have decreased the most.

May saw the end of the 11-month period, when the annual change of the consumer price index remained under zero. The previous time that the change of the consumer price index compared to the same month of the previous year was over zero was in May 2014, when it was also 0.1%.

In May compared to April, the consumer price index was influenced the most by housing, as the electricity that arrived at homes was 1.7% more expensive and rents increased by 3.6%.

2.1% more expensive motor fuel, 0.5% cheaper food and non-alcoholic beverages, and 1.4% cheaper alcoholic beverages, the prices of which decreased due to discounts, also had a bigger impact on the index. Compared to April, the biggest rise occurred in the prices of liquid fuel, which increased 47% due to the implementation of the new rates of excise duty.

Change of the consumer price index by commodity groups, May 2015
Commodity group May 2014 – May 2015, % April 2015 – May 2015, %
TOTAL 0.1 0.2
Food and non-alcoholic beverages -0.2 -0.5
Alcoholic beverages and tobacco 4.1 -1.2
Clothing and footwear 2.1 0.1
Housing 0.2 0.8
Household goods 0.7 -0.2
Health 3.1 0.3
Transport -4.8 0.8
Communications 1.0 0.2
Recreation and culture 1.3 0.9
Education -20.7 0.0
Hotels, cafés and restaurants 3.7 2.2
Miscellaneous goods and services 3.3 0.1

Source: Statistics Estonia

Inflation in Estonia reflects price developments on global markets

Data from Statistics Estonia show that the consumer price index was 0,6% higher in March than in February. The price level was 0.6% lower compared to March 2014 and consumer prices have been falling for ten consecutive months, year-on-year. Preliminary data indicate that the harmonised consumer price deflation for the euro area was 0.1% in March, which is the smallest price decrease over the past four months.

In the first three months of this year, consumer prices were mostly influenced by major price fluctuations on commodities markets. After a sharp price decrease at the start of 2015, the price of motor fuels went up by a total of 12% in February and March. In addition to the growth of crude oil prices on global markets, the price of motor fuels in monthly terms was pushed up by the simultaneous depreciation of the euro. Motor fuels were, however, 11% cheaper than a year earlier and this is probably the reason behind the price drop of many transport services in March.

At the same time, the euro was 4.3% lower against the dollar than in February, but compared to the peak of 2008, the euro is now approximately 30% cheaper. The depreciation of the euro should cause a pick-up in inflation, but so far, the impact on inflation has been small. The influence of exchange rate fluctuations on consumer prices is limited because of the large share of other euro area countries in Estonian foreign trade: about a fifth of the cost of imported goods are open to exchange rate changes. Capital goods and the intermediate consumption of companies are imported more often on the basis of contracts in foreign currency, and the price changes of such goods are passed into consumer prices over a longer period of time. Such transactions make up around 12% of consumer goods imports. However, the depreciation of the euro against the dollar has been offset by the appreciation of the euro against the rouble, which has made imports from Russia cheaper.

Most food prices were lower in March compared to the year before, but alcohol prices grew due to a rise in excise rates. The fall in food prices was influenced by global markets: the price index of the Food and Agriculture Organisation, which reflects prices on global markets, was about 18% lower in March than a year earlier. Food prices have been falling since early 2014, both because of an increase in inventories and good harvests. However, the impact of Russian sanctions has become greater and led to lower prices for milk and meat products on the internal market of the European Union.

Eesti Pank estimates that the cost of the consumer basket price in 2015 will remain on the same level as last year. The fall in consumer prices is likely to continue over the coming months. Price increases may still be expected in the second half of the year, as domestic inflation is growing and the fall in energy prices is decreasing.

Estonian CPI inflation

Largest contributions to CPI inflation


Source: Bank of Estonia

Author: Rasmus Kattai, economist at Eesti Pank

Consumer prices down for the 10th month

• Deflation continued in March
• Cheaper motor fuels and food behind the drop in prices
• Inflation expected at around 0% in 2015 (-0.1% in 2014)

In March, consumer prices decreased by 0.6% compared with the previous year and increased by 0.6% compared with the previous month. Prices, especially energy and food prices, are expected to increase gradually during the second half of 2015. Inflation rate is expected to be around 0% in 2015 as a whole.

Volatile motor fuel prices have had the biggest impact on consumer prices recently. The prices of fuels increased by 4.6% in a month, but remained still 11.3% lower than in March last year. Global crude oil prices grew in euros compared with February due to the continued weakening of the euro exchange rate against the USD. There is abundant supply of crude on the market and recent negotiations with Iran will probably mean a gradual loosening of the current sanctions. Iran holds up to 10% of global oil stocks, while its production volumes have fluctuated between 3% and 5% of global oil supply during the last 30 years.

In addition to energy, food prices also fell in Estonia compared with last year. According to the FAO, global food prices have been on a declining path since April last year due to good crops and high stocks, but also because of stronger dollar against several leading food exporters’ currencies.

The EUR was 22% weaker against the USD in March, on average, compared with last year. According to the Central Bank of Estonia, around 1/3 of the imports of goods and services are paid in the USD in Estonia. As most of these goods and services are either raw materials or capital goods (and not consumer goods), the weaker euro is expected to lift Estonia’s inflation with a certain lag.

Source: Swedbank


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