Indrek Neivelt: Estonian people accept price increases easily
Entrepreneur Indrek Neivelt said on Vikerraadio's morning show that Estonia's inflation, which is among the highest in Europe, is partly due to local consumers' tendency to accept price increases too easily.
"Future price hikes are highly dependent on consumer behavior. People in Estonia are accepting price increases too easily," Neivelt said.
"We must discuss pricing increases and ask hard questions. Ministers, public authorities and the legislative committees should push for answers."
"Eesti Pank, an entire quarter filled with specialists, is responsible for the price stability. They promised 2 percent, but the final figure was 22," Neivelt said.
Because there is no year-on-year price increase in commodity exchange prices, those who want to enter the market have a great opportunity to do so now, Neivelt said.
"Estonian market is a very small one and in many ways very oligopolistic," Neivelt said. "It is not a cartel, but everyone is okey with current pricing. It is convenient to take advantages of these opportunities and raise prices."
"A particularly heinous example was the 30 percent price increase at Tallinn Airport. What does this mean for the local economy?" Neivelt asked, referring to Ryanair, which has decreased the number of direct flights from Tallinn after the price hike. "An Estonian will accept a price increase, but an international airline will not."
Preliminary estimate from Statistics Estonia shows that the harmonized index of consumer prices increased by 18.8 percent year-over-year in January. In the Eurozone, Latvia's inflation rate remained higher than Estonia's. Statistics Estonia reported that the consumer price index increased by 19.4 percent between 2021 and 2022.
Eurostat estimates show that inflation in the Eurozone slowed to 8.5 percent in January from 9.2 percent in December. Inflation was slowest in Spain and Luxembourg, at 5.8 percent, followed by Malta at 6.7 percent.
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Editor: Kristina Kersa