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

The volume of industrial production increased in September

According to Statistics Estonia, in September 2016, the production of industrial enterprises increased 7% compared to September of the previous year. Production increased in manufacturing and the energy sector, but decreased in mining and quarrying.

In September, manufacturing production rose 5% compared to September 2015. The production growth was broad-based – in September, production surpassed the volume of the previous year in two-thirds of the branches of industry. The growth in production was mostly due to an increase in the manufacture of electrical equipment, chemical products and textiles. Production rose also in the manufacture of wood products, building materials and motor vehicles. Production fell in the manufacture of electronic, food and metal products.

In September, 71% of the whole production of manufacturing was sold on the external market. According to unadjusted data, the export sales of manufacturing production rose 10% and domestic sales 1% compared to September 2015.

In September 2016 compared to the previous month, the seasonally adjusted total industrial production rose 5%, with production in manufacturing having increased 6%.

Compared to September 2015, the production of electricity increased 33% and the production of heat 3%.Diagram: Volume index of production in manufacturing and its trend

Read more from 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

In August, the trade deficit was at the lowest level of 2016

According to Statistics Estonia, in August 2016, the exports of goods increased by 12% and imports by 8% compared to August of the previous year. Export growth was faster than import growth and reduced the trade deficit, which was at the lowest level of this year.

In August, exports from Estonia amounted to 1 billion euros and imports to Estonia to 1.1 billion euros at current prices. The trade deficit was 80 million euros (in August 2015, it was 108 million euros).

The top destination country of Estonia’s exports in August was Sweden (17% of Estonia’s total exports), followed by Finland (16%) and Latvia (10%). The biggest increase occurred in exports to Mexico, Finland and Germany (up by 33 million, 19 million and 14 million euros, respectively). Compared to August 2015, more electrical equipment was exported to Mexico, more mechanical appliances, optical appliances, wood and articles of wood to Finland, and more electrical equipment and miscellaneous manufactured articles to Germany. The biggest decrease occurred in exports to the Netherlands.

The biggest share in Estonia’s exports in August was held by electrical equipment, followed by miscellaneous manufactured articles, wood and articles of wood, and mineral products. The increase in exports was greatly influenced by the exports of electrical equipment (incl. communication equipment), miscellaneous manufactured articles (incl. prefabricated buildings of wood) and transport equipment (incl. motor cars). There was a decrease in the exports of mechanical appliances.

The share of goods of Estonian origin in total exports was 71% in August. Export growth was influenced the most by the exports of goods of Estonian origin, which increased 14% while the re-export of foreign goods grew 7%. The growth in the exports of goods of Estonian origin compared to August 2015 was influenced the most by a rise in the exports of electrical equipment, miscellaneous manufactured articles, mineral products, base metals and articles of base metal. Among goods of Estonian origin, the biggest decrease occurred in the exports of agricultural products and food preparations. By country, the exports of goods of Estonian origin increased the most in terms of exports to Mexico, Finland and Germany.

The main countries of consignment in August were Finland (13% of Estonia’s total imports), Germany (11%) and Lithuania (10%). The biggest rise occurred in imports from Russia, Germany and China. Compared to August 2015, there was a growth in the imports of mineral products from Russia, of transport equipment from Germany and of electrical equipment from China. The greatest decrease occurred in imports from Poland.

In August, the main commodities imported to Estonia were electrical equipment, agricultural products and food preparations, mechanical appliances, transport equipment and mineral products. The growth in imports was influenced the most by increased imports of transport equipment, agricultural products and food preparations, textiles and textile articles. The biggest fall occurred in the imports of mineral products.

In August 2016, export prices were at the same level as in August 2015, but import prices were down by 3%.

In August compared to July, the exports of goods increased by 15% and imports by 5%.Diagram: Estonia’s foreign trade by month, 2014–2016

Read more from Statistics Estonia

An Estonian household member spends an average of 395 euros per month

According to Statistics Estonia, in 2015, a household member spent an average of 395 euros per month – 106 euros more than in 2012. At the same time, there has been a decrease in the share of compulsory expenditure in the household budget.

According to the Household Budget Survey, in 2015, compulsory expenditure on food and dwelling accounted for 40% of the household budget or 157 euros. According to the previous survey, held in 2012, a household member spent 289 euros per month, of which compulsory expenditure amounted to 45% or 130 euros. Expenditures on food and dwelling are unavoidable in the household budget, i.e. compulsory expenditure, and the decrease of their share in total expenditure shows a rise in the level of well-being because there is more money and possibilities left for other expenditures (e.g. expenditures on recreation, incl. culture and travelling).

In 2015, a household member spent the most on food (92 euros per month), which accounted for 23% of the total expenditure. Expenditure on dwelling was 65 euros, on transport 51 euros, on leisure time 42 euros, on housekeeping 26 euros, on clothing and footwear 21 euros and on communication services (Internet, phone and mail services) 18 euros per month per household member.

Households in urban areas spent more money on dwellings than households in rural areas, expenditure per household member amounted to 69 and 56 euros per month, respectively. Expenditure on leisure time was also bigger in urban households than in rural households (respectively 46 and 35 euros per month per household member). Rural households spent more on transport: while in rural settlements 55 euros were spent per month per household member, then in urban settlements – 49 euros.

By county, the expenditures of households of Harju county were the biggest (449 euros per month per household member) and the smallest expenditures were recorded in the households of Ida-Viru county (279 euros per month per household member).

The estimates are calculated according to the data of the Household Budget Survey conducted in 2015. The most recent comparable data are from 2012, in interim years the survey was not conducted. In 2015, about 3,400 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 2015, a little over 581,000 households lived 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.

Source: Statistics Estonia

Estonian Economy and Monetary Policy 3/2016

The Estonian Economy and Monetary Policy is an Eesti Pank review released four times a year that summarises the main recent events in the global and Estonian economies. Twice a year, in June and December, the review also contains the forecast for the Estonian economy for the current year and the next two calendar years. Here is a short summery of the report.

The economy of the European Union and that of the euro area have been moving in the direction of more certain growth in recent years, though growth in the second quarter was again slower than in previous quarters and uncertainty about the future was increased by the referendum in the United Kingdom in June, in which the voters chose to leave the European Union.

Revised data put growth in the Estonian economy at 0.8% in the second quarter, leaving it below its long-term potential.

Although the unit labour cost based real effective exchange rate of the euro has appreciated for Estonia, exporting companies consider their competitiveness in the European Union market and further afield to be stronger than in the beginning of the year

Having fallen for more than two years, prices rose in August and took consumer price inflation back into positive territory.

Strong growth in wage income and consumption has boosted tax revenues. Tax revenues have also been raised by higher excise rates for alcohol, tobacco and fuels.

The main development in commodities markets in the second quarter was the drop in the oil price. It remains higher than it was at the end of last year though.

The euro area economy grew in the second quarter by 0.3% and by 1.6% over the year.

Increasing employment and low energy prices boosted purchasing power and so private consumption, which was again the main factor driving economic growth in the first quarter.

The contribution of investment to economic growth remained positive in the first half of this year, but growth in investment slowed in the second quarter.

Inflation remained close to zero in the euro area in the first half of the year.

Read more from Bank of Estonia website

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