Inflation in Estonia likely to rally from the autumn
Inflation in goods and services is forecast to pick up from the fall onward and overall inflation to return to a rate of 4 percent by year-end, some analysts say.
Retailers on the other hand have said that consumers will no longer be able to keep up with the steep price rises, ETV news show "Aktuaalne kaamera" (AK) reported.
Over the past two years, grocery prices have risen on average by 40 percent. While this surge has slowed in recent months, from the autumn onwards it is projected to return to full swing, when goods prices are expected to rise more rapidly once again.
LHV macro analyst Triinu Tapver told AK: "There are two reasons [for this.]"
"First, energy prices, which have not gone down; rather the tendency now is for them to rise. Second, there has been wage growth, which is also driving up the price of services," Tapver went on.
Kristjan Anderson, Head of Business Accounting at Selver, told AK that there is a need to hike prices, but that consumers are unlikely to go along with a rise of more than 5 percent.
He said: "Accelerating inflation could mean that today's 2 to 3 percent turns into 4 to 5 percent. I don't think more is on the horizon at the moment."
"And in terms of wages. The pressure on wages will be strong and retailers will be looking at it more from the perspective of how to make more optimal use of those pressures," Anderson added.
Instead of seeing rising wages, some employees will have their workload reduced where possible.
Restaurants and cafés are also planning to hike prices, despite the already widespread consternation about the price of a cup of coffee or a pastry.
Raul Mžavanadze, head chef at Magussolane restaurant in Tallinn, said: "[Prices] certainly must [rise]. We are also seeing that when you order the raw materials, every two weeks the bill goes up a bit, by a few euros. /.../ Last year, the bill was about €90, today the same bill comes to about €102."
"We will try to raise the price as little as possible, not even by half a euro, but by 20 to 30 cents, so as not to scare off customers," he added.
Triinu Tapver said she estimates that inflation could reach 4 percent as of year-end.
"Most likely, then, the economy as a whole will still contract this year. Next year we can really expect to see a bottoming out," she added.
AK reported that it will take at least two more years for purchasing power to return to 2020 levels, however.
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Editor: Andrew Whyte, Merili Nael
Source: 'Aktuaalne kaamera.'
