Incomes are growing faster than rising prices

Madis Müller,
Madis Müller, Source: Ken Mürk/ERR

Governor of the Bank of Estonia Madis Müller said people's incomes are growing faster than prices are rising. The bank is forecasting economic growth of 10 percent this year.

Speaking on ETV's morning show "Terevisoon" on Wednesday, Müller said such a fast increase in prices has not been seen in recent years. Energy prices have had the greatest impact on price growth statistics.

"People think that things and services are getting more expensive," Müller said. "It is comforting that people's incomes are growing even faster than prices are rising."

In addition to higher incomes, Müller said people increased their savings during the coronavirus crisis. Money withdrawn from the pension system is also waiting to be spent.

Müller said prices are rising due to an increase in commodity prices coupled with an increase in consumption and demand. Supply chain problems are also contributing.

He said it is logical that growth springs back faster after crisis and said economic growth and rising prices will calm down.

Müller agreed the situation is not so good in all sectors. For example, while the IT sector did not face major problems during the crisis, the tourism and accommodation industries are still struggling.

Estonia has recovered faster from the crisis than other European countries, he said.

"The start has been faster, entrepreneurs have adapted quickly and tried to cope with the restrictions," he explained. "It was lucky the coronavirus didn't hit us as hard as other countries."


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Editor: Helen Wright

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