Estonian inflation comes in at 3.4% y/y in December and 2018 alike

Estonian inflation comes in at 3.4% y/y in December and 2018 alike
By bne IntelliNews January 8, 2019

Estonia's consumer price index (CPI) growth remained at 3.4% y/y in December, data from Statistics Estonia showed on January 8. That leaves overall price growth in 2018 at 3.4%, the fastest in the Eurozone while also unchanged from 2017.

Inflation in 2018 owed primarily to the rising costs of housing, which increased 6.3% on the back of growing costs of electricity, solid fuels, and rent rates, the statistics office said. 

Rising prices of fuels and food and non-alcoholic beverages also contributed. Petrol prices expanded 12.4% last year while diesel was 11.4% more expensive to push prices in the transport sector 3.6% higher. Prices of food and non-alcoholic beverages grew 3.1% in 2018.

Prices only dropped in communications and education in 2018, at 4.7% and 1.9%, respectively.

In December, the Estonian CPI remained in positive territory for the 29th consecutive month. In monthly terms, consumer prices fell 0.3% in December, easing the m/m fall rate from -0.5% seen in the preceding month.

A 9.2% y/y growth in housing prices drove annual inflation in December, data showed. As in 2018, that was due to surging prices of electricity and solid fuels followed by hikes in the costs of gas and heating.

Prices of food and non-alcoholic beverages rose 1.8% y/y in December while alcoholic beverages and tobacco became 5.8% more expensive in annual terms. 

There was also a 5.4% y/y rise in the price of diesel fuel and a 1.8% y/y expansion in the price of petrol. Prices in the transport sector grew 0.5% y/y overall.

Communications was the only segment to see prices drop, by 4.8% y/y in December.

The outlook for price growth in 2019 is one of moderation.

"Inflation is likely to fall in 2019 if only because excise rates will rise by less. Eesti Pank forecasts that inflation will be below 3% this year assuming no very large changes in commodity prices," Eesti Pank's economist Sulev Pert said in a comment.

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