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Estonia's inflation could fall below 20 percent in December

Shoppers in a supermarket.
Shoppers in a supermarket. Source: Ken Mürk/ERR

Estonia's inflation in October was 22.4 percent, the highest in the Eurozone, but it has fallen almost 3 percent over the last two months and could dip below 20 percent in December, the Ministry of Finance believes.

Statistics Estonia's flash forecast put inflation at 22 percent last month, 2 percent lower than in September. In August it was 25.2 percent.

Data shows rising prices have also started to slow, Monday's "Aktuaalne kaamera" reported.

Year-on-year comparisons have slowed too because prices had already started to rise last October. The introduction of the universal electricity service has also played a part.

"The level of the universal service price cap is actually very high. Significantly higher than the price of electricity in October last year. On this basis, the impact of these mechanisms is not yet noticeable," said SEB economic analyst Mihkel Nestor.

October's inflation was influenced most by food prices.

"We are not just talking about energy components, the average price increase for food is already approaching 30 percent. Gasoline is up. These all have very big impacts," said Viktoria Trasanov, lead analyst at Statistics Estonia.

Despite inflation, shoppers have still not greatly reduced their consumption, AK reported.

"We talk all the time about the fact that Estonia has the highest inflation in Europe because of energy and food, but it would still be the highest in Europe without them, because if we look at the consumption side, the economy is actually still doing surprisingly well," said Nestor.

The Ministry of Finance told AK in a written statement that if inflation continues to slow it will fall below 20 percent in December. It has been above that level since May.

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Editor: Helen Wright

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