Inflation of close to 4% YoY in June is primarily down to the low reference base in 2020, the year the coronavirus arrived, according to an expert.
SEB economic analyst Mihkel Nestor said: “The growth in consumer prices clearly reflects the recovery of the economy from the coronavirus crisis.”
The consumer price index (CPI) increased in June by 3.8% compared with June 2020, and by 1.2% between May and June this year, according to state agency Statistics Estonia.
Meanwhile, goods were 3.1% more expensive than they were in June last year, while services rose in price by 5% over the same period.
“Whereas in June this year, housing costs grew by 8.2% and expenditure on transport by 10.6%, in June 2020, these were in decline by 3.5% and 7% respectively,” Nestor added.
This will continue through to year-end. “Rapid growth in consumer prices will also continue in the second half of the year. In addition to last year’s low reference base, price growth will also be boosted by the sums to be withdrawn from the second pillar pension fund, which will sharply increase households’ demand.”
Eating out has become more expensive for the first time in over a year, he added, while clothing and recreational activities also cost more, suggesting that demand for these has returned to its pre-crisis levels, Nestor said. (ERR/Business World Magazine)