TALLINN - The first signs of repercussions in the Baltics from the sky-high crude oil price surfaced this week, with Estonia reporting higher than expected consumer prices in May and with Lithuania informing of a surge in the producer-price index for the same month.
Estonia's statistical office reported that the consumer price index jumped 2.1 percent in May compared with April, with goods in general becoming 3 percent more expensive. Statistics experts said the CPI was mostly influenced by an increase in prices for gasoline and sugar.
Compared with May 2003, goods and services were on average 3.7 percent more expensive last month. Administered prices showed year-on-year growth of 7.1 percent, and non-administered prices 2.5 percent.
Bank of Estonia officials were quick to downplay the news, claiming the steep rise was a one-time phenomenon following the country's entrance to the EU. Still, officials warned the trend had not exhausted itself.
"The rise in food and motor fuel prices in May will affect the June index as well," the head of the central bank's economic policy department, Andres Saarniit, said.
He explained that the rise in sugar and gasoline prices accounted for roughly three-fourths of the overall rise. As those goods carry significant weight in the consumer basket, they overshadowed a decline in the prices of clothing and footwear, household goods and several other groups of articles, he observed.
"Nevertheless, it's a one-time jump that overestimates the yearly rise in consumer prices."
During the past 12 months consumer prices have risen 1.1 percent, and the Bank of Estonia has predicted the CPI will increase 2.8 percent in 2004.
"It's not a question of lasting inflationary pressure. The main risk pushing up consumer prices this year is the behavior of world crude prices," Saarniit explained.
The Finance Ministry, for its part, stressed the same factors.
"The rise in food and motor fuel prices resulted in year-on-year growth of 3.7 percent in consumer prices, the highest since June 2002," Finance Ministry analyst Kristiina Kruusa said.
If Estonia's inflation rate had been below the euro zone's since April 2003, in May it rose 1.2 percentage points above it.
Also, the rise in food prices was dictated mainly by an almost 140 percent jump in the price of sugar, but significantly higher prices for fruit in comparison with May 2003 also played a role.
Remarkably, an even steeper CPI rise was avoided thanks to a 0.8 percent drop in the prices of telecommunication services, which Kruusa said was caused by the recently launched discount campaigns by mobile telephone service providers.
Lithuania's producer prices rose by 2.9 percent in May, driven higher by rising petrochemical prices. Compared with May 2003, the country's producer price index surged by 10.5 percent, the statistics department has reported.
Oil product prices leapt by 12.8 percent in month-on-month terms. Compared with May 2003, petrochemical product prices surged by 45 percent last month.
Excluding oil products, Lithuania's producer prices climbed by 0.3 percent month-on-month, and 3.3 percent in year-on-year terms.
