Swedbank: Inflation around the corner
With average salary having risen 7-8 percent in 12 months, higher inflation is just around the corner, with purchasing power rise set to stall, said Estonia's biggest private bank, Swedbank.
According to Statistics Estonia, the average gross monthly salary is 1,045 euros, up 7 percent in 12 months, while the Tax and Customs Board puts the median net salary at 733 euros, up 8 percent since the same period a year ago.
Salary hikes have been the highest in the low-end of the scale. Due to low inflation, and deflation in sectors such as energy, the average purchasing power has increased in the last year, Swedbank said.
General economic growth has been driven by consumption, while export volumes have plummeted by 10 percent since September 2014.
“But consumption-based economic growth cannot last long. If export figures do not improve, salary growth will slow sooner or later,” the bank said.
Salary increases are set to continue as labor shortage is still a problem and the minimum wage will jump 10 percent on January 1, 2016. The bank said purchasing power growth will slow as prices will begin to increase and labor tax cuts will be far smaller compared to the beginning of 2015.