No fall in Estonian inflation

According to Statistics Estonia, the percentage change of the consumer price index in June 2008 compared to June 2007 was 11.4%.

In June 2008 compared to June of the previous year, the prices of goods changed by 10.9%, of which the prices of food by 15.8% and the prices of manufactured goods by 7.0%. The prices of services increased 12.5%. Regulated prices of goods and services changed by 22.0% and non-regulated prices by 8.5%.

As in the previous months, the index was mainly influenced by the price increase of food, the increase in the expenditures on housing, as well as by the increase in the prices of motor fuel. Dairy, cereal and meat products gave four fifths of the price increase of food.

The increase in the expenditures on housing was mostly influenced by the increase in the prices of heat energy. Three quarters of the 14.7% price increase of the transport index was caused by the direct price increase of motor fuel.

On average, the prices of goods and services in June were 0.6% higher than in May.

Commenting on the figures, Danske Bank analyst Violeta Klyviene said: "We expected a marginal deceleration in consumer price growth, but due to ongoing rising oil prices, CPI remained at the same high level of 11.4% year-on-year (0.6% month-on-month) as it was in May.

Worse, Klyviene doesn't expect inflation to begin falling any time soon. "We are not expecting a deceleration in consumer price rises in July, as new excise duties on alcohol and tobacco will take effect from 1st July. In addition, the electricity tariffs of Eesti Energia will go up 5-11%. Despite a sharp deceleration in domestic demand, the hike in so-called administrative prices and upward trend in oil prices is keeping Estonian CPI at a high level," she said.