TALLINN – The stunning 2.1 percent monthly rise in the consumer price index in May that has economists in alarm was mainly caused by a hike in the fuel excise tax and sugar prices, the Statistics Board stated earlier this week.
The price for sugar price soared by 140 percent in May, and gasoline jumped by 17 percent over the same period.
One kilogram of sugar in a Tallinn supermarket now costs about 1.15 euros, while one liter of gas (98 octane) costs almost 0.8 euro.
The burst in prices over the month of May has raised annual CPI growth to 3.7 percent. Finance Ministry analysts have predicted further growth of gasoline prices due to the situation on the international crude market and the subsequent growth of prices for transportation tickets and related services.
The Bank of Estonia rushed to downplay the negative news on June 7, stating that the one-time jump in the index did not necessarily mean that prices would continue to rise. According to Andres Saarniit of the economic policy department at the bank, the increase of the sugar price and the fuel price had contributed up to three-thirds to the consumer price increase.
Given that fuel, sugar and products made of sugar play a significant role for consumers, the decrease in the price of clothes, footwear and other goods prices went unnoticed, the analysts noted.
Saarniit also said the May food and fuel price hike would affect the consumer price index in June.
The Bank of Estonia is forecasting a total of 2.8 increase in the consumer price index (CPI) for 2004.
"Hence we are not dealing with sustainable inflation pressure. The main risk for increasing the CPI is the oil price fluctuations on the global market," said Saarniit.