Providing no major changes occur in commodity prices, the Bank of Estonia is forecasting that inflation in Estonia will remain below 3% in 2019.
Inflation remained high in Estonia in 2018, as prices rose at twice the average rate for the euro area, averaging 3.4% on year, said Bank of Estonia economist Sulev Pert in his comments on December and full-year inflation data published by Statistics Estonia on Tuesday.
"The primary cause for inflation in Estonia and in the euro area as a whole was the increase in the price of crude oil, as the price of a barrel of oil on world markets rose from $69 at the start of the year to over $80 by October," Mr Pert explained. "Inflation in Estonia was driven higher by excise increases that entered into force at the start of last year, as well as by rapid wage increases."
On top of prices for motor fuels, other energy prices rose gradually last year, increasing for electricity, solid fuels and heat energy alike. Inflation pressures were eased by food products, however, which saw falling inflation throughout the year.
Consumer prices were 0.3% lower in December than in November as a result of drops in the prices of motor fuels, but also due to seasonal discounts on manufactured goods. More discounts were offered on shoes and apparel than in December 2017. The prices of services, meanwhile, are on the rise, primarily due to higher prices for leisure services.
"Inflation is likely to fall in 2019, if only because excise rates will be increasing by less," Mr Pert said. "The Bank of Estonia is forecasting that inflation will be below 3% this year, assuming there will be no very big changes in commodity prices."
He added that futures prices for oil on the commodities market are currently at around $60 per barrel, although actual prices may differ, as they have before.
Inflation in Estonia totalled 3.4% on year for both December and all of 2018, Statistics Estonia announced on Tuesday.
Editor: Aili Vahtla