TALLINN — Estonia’s consumer price index increased in March in spite of continued weak domestic demand given the high unemployment and wage cuts caused by the crisis.

Statistics Estonia announced Thursday that the country’s CPI increased by 1.7 percent compared to March 2009. Compared to February, the rise was 1.3 percent. Although the prices of consumer goods rose by 2.3 percent and services by 0.5 percent but the price of food items declined by 1 percent.

Karel Lember, an economic analyst at [private_supervisor]the Ministry of Economic Affairs and Communications said the price hike is due to external factors, namely the increase in oil prices, which recently hit an 18-month high.

Given Estonia’s open economy, Tõnu Palm, a chief economist at Nordea said that earlier deflation was less due to the crisis directly and more because of lower oil prices.

“In upcoming months we expect the inflation to slow down as the impact of last year’s low energy prices is slowly receding,” Palm told Baltic Reports. “In the annual summary of 2010 we expect the CPI’s medium growth to be 1 percent.”

Will the price rise continue? Lember says yes.

“In the annual comparison the prices will likely stay higher during the next months,” Lember told Baltic Reports. “However compared to last month the hike will not be as rapid.”

The vegetable prices will begin to drop for seasonal reasons, and also the clothing prices should not have much space to rise, according to Lember. On the other hand the movement in fuel price is harder to predict, but that will also affect the prices.

“When it comes to recreational services, then the price hike depends on the recovery of demand, but if it should happen then the impact on the prices could be quite strong,” said Lember.

Swedbank analyst Annika Paabut said the energy prices will continue to rise, something that is directly affected by the prices in the world market but also because since April 1 the energy will be bought from the Baltic exchange.

“The gas prices will definitely continue the rise,” said Paabut.

However, Paabut said that the increase in prices of clothing and footwear is surprising as the those products are already higher than in Europe average, so she expects certain corrections. [/private_supervisor] [private_subscription 1 month]the Ministry of Economic Affairs and Communications said the price hike is due to external factors, namely the increase in oil prices, which recently hit an 18-month high.

Given Estonia’s open economy, Tõnu Palm, a chief economist at Nordea said that earlier deflation was less due to the crisis directly and more because of lower oil prices.

“In upcoming months we expect the inflation to slow down as the impact of last year’s low energy prices is slowly receding,” Palm told Baltic Reports. “In the annual summary of 2010 we expect the CPI’s medium growth to be 1 percent.”

Will the price rise continue? Lember says yes.

“In the annual comparison the prices will likely stay higher during the next months,” Lember told Baltic Reports. “However compared to last month the hike will not be as rapid.”

The vegetable prices will begin to drop for seasonal reasons, and also the clothing prices should not have much space to rise, according to Lember. On the other hand the movement in fuel price is harder to predict, but that will also affect the prices.

“When it comes to recreational services, then the price hike depends on the recovery of demand, but if it should happen then the impact on the prices could be quite strong,” said Lember.

Swedbank analyst Annika Paabut said the energy prices will continue to rise, something that is directly affected by the prices in the world market but also because since April 1 the energy will be bought from the Baltic exchange.

“The gas prices will definitely continue the rise,” said Paabut.

However, Paabut said that the increase in prices of clothing and footwear is surprising as the those products are already higher than in Europe average, so she expects certain corrections. [/private_subscription 1 month] [private_subscription 4 months]the Ministry of Economic Affairs and Communications said the price hike is due to external factors, namely the increase in oil prices, which recently hit an 18-month high.

Given Estonia’s open economy, Tõnu Palm, a chief economist at Nordea said that earlier deflation was less due to the crisis directly and more because of lower oil prices.

“In upcoming months we expect the inflation to slow down as the impact of last year’s low energy prices is slowly receding,” Palm told Baltic Reports. “In the annual summary of 2010 we expect the CPI’s medium growth to be 1 percent.”

Will the price rise continue? Lember says yes.

“In the annual comparison the prices will likely stay higher during the next months,” Lember told Baltic Reports. “However compared to last month the hike will not be as rapid.”

The vegetable prices will begin to drop for seasonal reasons, and also the clothing prices should not have much space to rise, according to Lember. On the other hand the movement in fuel price is harder to predict, but that will also affect the prices.

“When it comes to recreational services, then the price hike depends on the recovery of demand, but if it should happen then the impact on the prices could be quite strong,” said Lember.

Swedbank analyst Annika Paabut said the energy prices will continue to rise, something that is directly affected by the prices in the world market but also because since April 1 the energy will be bought from the Baltic exchange.

“The gas prices will definitely continue the rise,” said Paabut.

However, Paabut said that the increase in prices of clothing and footwear is surprising as the those products are already higher than in Europe average, so she expects certain corrections. [/private_subscription 4 months] [private_subscription 1 year]the Ministry of Economic Affairs and Communications said the price hike is due to external factors, namely the increase in oil prices, which recently hit an 18-month high.

Given Estonia’s open economy, Tõnu Palm, a chief economist at Nordea said that earlier deflation was less due to the crisis directly and more because of lower oil prices.

“In upcoming months we expect the inflation to slow down as the impact of last year’s low energy prices is slowly receding,” Palm told Baltic Reports. “In the annual summary of 2010 we expect the CPI’s medium growth to be 1 percent.”

Will the price rise continue? Lember says yes.

“In the annual comparison the prices will likely stay higher during the next months,” Lember told Baltic Reports. “However compared to last month the hike will not be as rapid.”

The vegetable prices will begin to drop for seasonal reasons, and also the clothing prices should not have much space to rise, according to Lember. On the other hand the movement in fuel price is harder to predict, but that will also affect the prices.

“When it comes to recreational services, then the price hike depends on the recovery of demand, but if it should happen then the impact on the prices could be quite strong,” said Lember.

Swedbank analyst Annika Paabut said the energy prices will continue to rise, something that is directly affected by the prices in the world market but also because since April 1 the energy will be bought from the Baltic exchange.

“The gas prices will definitely continue the rise,” said Paabut.

However, Paabut said that the increase in prices of clothing and footwear is surprising as the those products are already higher than in Europe average, so she expects certain corrections. [/private_subscription 1 year]

— This is a paid article. To subscribe or extend your subscription, click here.