Estonia saw a slight dip in inflation last month, but prices are still rising at a concerning rate, according to LuminorS chief economist, lenno Uusküla.
Consumer prices fell by 0.4% in November compared to October, and by 0.2% when adjusted for seasonal changes. However, year-on-year, prices are still 3.7% higher. Looking at the past three months,prices have climbed by 0.7%,resulting in an annualized inflation rate of 2.8%.
“Excluding seasonal variations, alcohol and tobacco prices saw the biggest jump in November, rising by 0.9%. This was driven by increases in the cost of spirits and beer,” Uusküla explained. “food and non-alcoholic beverage prices also rose by 0.6%, with fish products, fats, sugar, coffee, and meat all becoming more expensive. The rising cost of food continues to be a meaningful burden for Estonian families.”
Uusküla noted that the sharp increase in transportation costs seen in October was entirely reversed in November. “Air ticket prices, which surged by 65% in October, fell back to 5% below their previous level. This resulted in an overall decline of 1.6% in transportation prices, bringing them back to September levels. In November, prices for housing-related expenses also fell by 0.6%, leisure activities by 0.3%, and communication by 0.1%,” he said.
“While November brought some relief, prices in Estonia are still increasing at a very rapid pace,” Uusküla cautioned. “Both companies and the government need to prioritize finding ways to avoid further price hikes and, if possible, to lower them. Consumers also have a role to play by demonstrating that they value lower prices and making purchasing decisions accordingly. This collective effort will help the Estonian economy emerge from its current challenges.”
Source: BNS
Estonia Sees Slight Inflation Ease, But Prices Remain a Concern: An Expert Analysis
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While Estonia witnessed a modest dip in inflation last month, prices continue to rise at an alarming rate, prompting concerns about the country’s economic health. We sat down with Lenno Uusküla, Chief Economist at Luminor, to dissect the latest inflation data and understand its implications for Estonian households and businesses.
Understanding the Recent Fluctuations
Even though consumer prices declined by 0.4% in November compared to October, and by 0.2% when adjusted for seasonal changes, Uusküla cautions against complacency.
“Year-on-year, prices are still 3.7% higher. Looking at the past three months, prices have climbed by 0.7%, resulting in an annualized inflation rate of 2.8%.” -Lenno Uusküla,Chief Economist at Luminor
we asked Uusküla to shed light on the drivers behind these fluctuations.
“Excluding seasonal variations, alcohol and tobacco prices saw the biggest jump in November, rising by 0.9%. This was driven by increases in the cost of spirits and beer. Food and non-alcoholic beverage prices also rose by 0.6%, with fish products, fats, sugar, coffee, and meat all becoming more expensive. The rising cost of food continues to be a meaningful burden for Estonian families.”
Transportation Costs Reverse Course
November saw a reversal of the sharp increase in transportation costs observed in October.
“Air ticket prices,which surged by 65% in October,fell back to 5% below their previous level. This resulted in an overall decline of 1.6% in transportation prices, bringing them back to September levels.”
-Lenno Uusküla,Chief Economist at Luminor
Uusküla attributed this change to various factors,including potential seasonal adjustments and fluctuations in global fuel prices.
Looking Ahead: A Call for Collective Action
Despite the slight respite in November, Uusküla emphasized the need for a multi-pronged approach to curb inflation.
“while November brought some relief,prices in Estonia are still increasing at a very rapid pace. Both companies and the goverment need to prioritize finding ways to avoid further price hikes and, if possible, to lower them.”
-Lenno Uusküla, Chief Economist at Luminor
He stressed the importance of government policies that promote competition and encourage price stability. He also urged companies to find ways to optimize their operations and minimize cost increases.
Key Takeaways and Next Steps
The easing of inflation in November offers a glimmer of hope, but it’s vital to remember that prices in Estonia are still rising at a concerning rate. We need a concerted effort from all stakeholders – government, businesses, and consumers – to tackle this challenge and ensure a stable economic future for Estonia.
Read more about Estonia’s economic outlook
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