Electricity price increase to hit the domestic market

  • 2012-10-04

TALLINN - The increase of electricity price and costs connected to electricity consumption will take at least 100 million euros more money out of the pockets of Estonian people and companies next year, Aripaev online estimates.

The electricity price increase, which results from opening the electricity market fully to competition, will affect the inflation rate and decreasing real incomes affect consumption and reduce economic growth expectations. The state won’t take any major steps to ease the price increase.

“It will mostly hit the domestic market,” said Danske Bank Eesti manager Aivar Rehe. He said that family budgets will become more tense and consumers start postponing purchase decisions. “Retail traders will see smaller growth figures,” he added.

AS Prisma Peremarket manager Janne Lihavainen said that price increase naturally affects traders but also creates tougher competition between them, adding that he believes they can increase their volumes next year.

In the second quarter of this year, the economy grew by 2.2 percent from last year but it was not motored by exports anymore, but the domestic market. Due to weaker foreign demand, analysts believe that exports won't start increasing and the economic growth should be based on consumption.