Bank of Estonia: Prices to continue to fall in second half of 2020

Bank of Estonia (Eesti Pank) coat of arms.
Bank of Estonia (Eesti Pank) coat of arms. Source: Siim Lõvi /ERR

According to Bank of Estonia (Eesti Pank) economist Sulev Pert, prices will continue to fall throughout the second half of the year due to the sharp economic downturn and rising unemployment.

Pert said in a press release: "The prices for services have fallen, as travel and leisure are still restricted due to the coronavirus. Consumers prefer to save or spend free money on industrial goods and food."

According to Statistics Estonia (Statistikaamet), consumer prices fell by 0.9 percent year-on-year in July. Energy prices fell 10 percent, but food, including alcohol and tobacco, rose 1.7 percent. "Core inflation, which covers both industrial goods and services, has remained close to zero since April," Pert added.

The economist said that the fall in prices was mainly due to energy prices, as motor fuels became cheaper by 14 percent on year.

Pert noted: "Although the price of a barrel of crude oil exceeded 40 US dollars on the world market in July, its impact on consumer prices has been mitigated by the strengthening of the euro exchange rate."

Pert said that consumer electricity prices have fluctuated sharply in recent months because cheap electricity from Norway and Sweden cannot reach the Baltic states due to limited transmission capacity.


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Editor: Kristjan Kallaste

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