Survey: Public expect rising prices as COVID-19 crisis lifts

Two two-euro coins in a vice (photo is illustrative).
Two two-euro coins in a vice (photo is illustrative). Source: Siim Lõvi/ERR

More and more people are expecting the rate of inflation to continue rising, according to a recent survey, as economies emerge from the coronavirus crisis.

The consumer survey, compiled by the Institute of Economic Research (Eesti Konjunktuuriinstituut) found that the consumer barometer the organization routinely compiles shows the number of people expecting prices to rise in the near future has grown.

Inflation has been experienced in other countries, including the U.S., while in Estonia, the Consumer Price Index (CPI) went into the black again when based on year, having seen a period of deflation resulting from the early stages of the pandemic.

In April 2020, CPI stood at - (minus) 0.8 percent on year, principally the result of the arrival of the coronavirus. One year later, CPI was +1.9 percent.

Early 2020 had also seen world oil prices go into negatives also.

Rasmus Kattai, an economist at Eesti Pank, Estonia's central bank, says more rapid price growth is likely to appear in Estonia throughout the year, as the crisis comes to an end and economic activity grows. 

Kattai put his CPI forecast for 2021 at over 2 percent, driven in particular by rising food prices, though wage growth is likely to outstrip CPI, he said.

Marje Josing, institute of economic research director, concurs, with rising commodity prices worldwide and supply chain issues finding their way into food and other consumer price rises.

While central banks are often pursuing looser monetary policy, she says, the European Central Bank is unlikely to install any drastic changes.

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Editor: Andrew Whyte

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