Inflation unrelenting in Estonia

  • 2006-07-12
  • From wire reports
TALLINN - Annual inflation in Estonia reached 4.3 percent as of the end of June, with consumer prices showing little sign of relenting given the Baltic state's double-digit growth.

The Statistical Office reported that goods and services in June were 4.3 percent more expensive on average than in June 2005. Administratively regulated prices were up 6.1 percent, while nonregulated prices rose 3.7 percent. Though high, the year-on-year rise was down from May, when it comprised 4.7 percent.

Commenting the data, the Bank of Estonia said that inflation was shaped mainly by domestic economic factors. The slight slowdown in comparison with May was facilitated by lower fuel prices, though wage pressure propped up inflation in services.
"Faster wage growth and easy credit have created a favorable demand environment in which it is easier for businesses to raise prices. So a part of retail enterprises have even managed to increase their margins," Martin Lindpere, head of the economic forecasting subdivision of the Bank of Estonia's policy department, said.

Wage and salary growth has at the same time caused extra expenses for service providers, the bank said.
Lively activity in the real estate sector is telling on housing-related costs. Repair workshas become more expensive and rentals too are on the rise, the central bank observed.
Estonian officials announced at the end of June that GDP growth in the first quarter amounted to 11.7 percent.