Estonian inflation rises to 11.3%

Mar 10, 2008
By Mike Collier

TALLINN -- Inflation is still on the rise in Estonia, with no immediate prospect of a decrease according to the latest information from the Bank of Estonia.

Official figures reveal that the Estonian Consumer Price Index (CPI) basket became 0.4% more expensive in February, bringing year-on-year price growth to 11.3%. One grain of comfort is that the month-on-month price increase was considerably slower in February compared to the 2.2% increase in prices in January.

"Economic cooling, seen in the rapid decline in the volume of retail trade and industrial production, contributes to the easing of domestic price pressures. Compared to end-2007, wage growth has slowed, but the goverment should stimulate a further slowing with the help of fiscal policies," said Eesti Pank economist Martin Lindpere.

However, the slowdown in the rate of increase may signal that inflation will start to decrease later this year, Lindpere believes.

"The next monthsÂ'' high inflation rate will be sustained by strong external price pressures, which are a temporary development and should subdue in the second half of this year, contributing to a considerable slowdown in the inflation rate," he said.

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