Food and drink prices in stores in Estonia are set to rise again in the new year, as the effects of indirect tax hikes announced by the Reform-Eesti 200-SDE coalition back in April make themselves known.
With January 1 being a national holiday, most of the changes will make themselves known in terms of higher prices on the shelves from next Tuesday, January 2, as the VAT rate in Estonia, more properly a sales tax, rises two percentage points, to 22 percent.
This may make New Year's Day a busier day for supermarkets than would normally be the case.
Additionally, the alcohol excise duty rate will rise by five percentage points, as will the deposit recycling fee imposed on beverage manufacturers.
ETV news show "Aktuaalne kaamera" (AK) reported an average price rise of 1.7 percent forecast as a result of the change, though retailers say that this will vary across product types, and were unable to provide more detail at this point.
Chief economist at Luminor Bank, Lenno Uusküla, said that the rise will exert further pressure on people's wallets, meaning that little to nothing is left for savings, once essential purchases have been made.
Uusküla said: "People will remain poorer to the extent of this 1.7 percent [average rise in prices]. This means the purchasing power of their wages will fall further. This is where wage rise pressure derives from, leading to wage-price inflation as another round of wage increases occurs."
Kristjan Anderson, chief accountant at supermarket Selver, referred to "price elves" amending labels in the new year.
"The elves have [already] entered the price changes in the program for the most part, but these will not take effect until January 2024," he quipped.
Marilin Jürisson, purchasing manager at Rimi, said that in her company's case, initial price changes for the new year have already reached less price-sensitive products such as "industrial goods," while for food and drinks, prices on the shelves remain unchanged until January 2.
The retail spokesperson AK interviewed were unable to pin down more specific average price hikes in the New Year, adding that competition will play a role here.
For this reason, shoppers are advised to examine price labels carefully in the coming weeks; there will be plenty of campaigns on individual products, or products which see a lower-than-average degree of inflation.
"An average price change of 1.7 percent cannot be realized for all products, so the change for some products will be somewhat larger," Kristjan Anderson said, referencing milk, particularly the variety sold in plastic bags, some other dairy products, and more popular brands of bread, as potential examples.
Editor: Andrew Whyte, Marko Tooming
Source: 'Aktuaalne kaamera,' reporter Vahur Lauri.