Inflation in Estonia is set to continue to remain faster than the eurozone average for the foreseeable future, as there are no rapid solutions to the labour shortage and energy prices remain high, SEB private banking strategist Peeter Koppel said in his comments on July inflation data.
According to Koppel, Estonia's small and open economy depends on the external environment and reacts to changes there with leverage, so to speak.
"When our main economic partners are experiencing economic growth, our economic growth is higher," he told BNS. "Under conditions of faster economic growth, inflation tends to speed up here as well."
In services, a chronic labour shortage and the ensuing wage pressure are making a significant contribution to inflation during this period of growth.
"We are importing inflation from the external environment, so to speak, via energy prices," Koppel explained. "As the external environment continues to be more or less favourable for the time being, there continues to be pressure for energy prices to remain high, and as we know, the labour shortage is a problem for which there are no rapid solutions. Our inflation will continue to be faster than the eurozone average for the forseeable future."
Estonia's consumer price index (CPI) in July increased 0.1% compared to June but 3.5% on year, Statistics Estonia announced on Tuesday. Compared to July 2017, goods were 2.9% and services 4.4% more expensive, while regulated prices of goods and services rose by 10.1% and non-regulated prices by 1.7% on year.
Editor: Aili Vahtla