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Friday, October 20, 2017

Prices slow in Estonia in August

Prices in Estonia remained unchanged from July and slowed in August from 3.4 percent to 2.9 percent, according to data from Statistics Estonia.

The euro area showed August inflation slowing from 1.6 percent to 1.3 percent, according to initial estimates.

Estonia saw a faster inflation in the euro, mostly due to a 28.4 percent rise in electricity prices compared with the year before. With electricity prices taken out, inflation only rose 1.8 percent. Vegetable prices also affected the inflation because they were 16 percent lower than in July. A rise in prices of unprocessed food was offset by lower prices on global markets while a rise in processed food products on international markets, especially dairy, was also recorded.

Households saw a 4.9 percent increase in energy costs over the year before and a 4.7 percent decrease in the price of motor fuel. Issues in Syria are expected to affect oil prices.

In August, core inflation fell to 1.2 percent with prices of manufactured goods rising 1.3 percent and services prices rising 1.1 percent. Labor costs rose 8 percent for the second quarter, which may contribute to core inflation being considered low.

Companies have mainly financed rapid wage growth through the reduction of profits, though this has occurred less in sectors driven by domestic demand such as real estate and retail. Prices for services other than communication rose 4.2 percent year-on-year.

Estonian consumer price inflation for 2013 is expected to be 3 percent.