TALLINN — A trend toward inflation, which ran rampant during the boom years, is increasing in the Baltics as their economies recover from double-digit gross domestic product drops during the crisis last year.
The trend is most marked in Estonia. Statistics Estonia announced Monday that the country’s consumer price index increased by 3 percent year-on-year in May, up from 0.2 percent in April. The prices of consumer goods rose by [private_supervisor]3.8 percent and services rose by 1.7 percent. Manufactured goods went up by 5.5 percent and food products increased by 1.7 percent compared to May last year.
The index was strongly affected by higher gas prices, which made a 28.6 percent jump and energy costs which increased by 10.9 percent.
According to Martin Lindpere, an economist at the Bank of Estonia, the current inflation rate is relatively high against the backdrop of last year’s severe recession and the current excess capacity in the economy.
“Prices still have room for downward adjustment. The price rise, on the contrary, may inhibit the recovery of growth,” Lindpere told the press.
The Estonian Ministry of Economy is positive and expects the increase of inflation to halt in July when the effect of indirect taxes set a year ago will end.
Kristjan Pungas, an analyst at the Ministry of Finance told the press that the inflation may accelerate in June once the sales tax in Tallinn will come into force and the electricity prices rise. After that the acceleration of inflation will slow down.
“The peak of the price rise is estimated to stay in June,” said Pungas.
In the two southern Baltic states inflation is coming on slower.
In Lithuania the CPI increased 0.7 percent year-on-year in May, up from 0.4 percent in April. Meanwhile in Latvia, the hardest-hit of the three countries, the CPI decline ebbed in May to -2.3 percent year-on-year from -2.7 percent the previous month.
“In general, we expect cost-push inflation to accelerate in the Baltics in the coming months. Negative domestic demand has temporarily halted a rapid price increase, but still there is a high risk of a relatively strong pass through of global energy prices to local consumer prices,” Violeta Klyvienė, Danske Bank’s pan-Baltic financial analyst said in a statement to the press.
“It seems that Russian Gazprom is preparing to raise the price of gas in the Baltic countries and this would push inflation into an upward trend especially in Lithuania and Latvia,” Klyvienė said.[/private_supervisor] [private_subscription 1 month]3.8 percent and services rose by 1.7 percent. Manufactured goods went up by 5.5 percent and food products increased by 1.7 percent compared to May last year.
The index was strongly affected by higher gas prices, which made a 28.6 percent jump and energy costs which increased by 10.9 percent.
According to Martin Lindpere, an economist at the Bank of Estonia, the current inflation rate is relatively high against the backdrop of last year’s severe recession and the current excess capacity in the economy.
“Prices still have room for downward adjustment. The price rise, on the contrary, may inhibit the recovery of growth,” Lindpere told the press.
The Estonian Ministry of Economy is positive and expects the increase of inflation to halt in July when the effect of indirect taxes set a year ago will end.
Kristjan Pungas, an analyst at the Ministry of Finance told the press that the inflation may accelerate in June once the sales tax in Tallinn will come into force and the electricity prices rise. After that the acceleration of inflation will slow down.
“The peak of the price rise is estimated to stay in June,” said Pungas.
In the two southern Baltic states inflation is coming on slower.
In Lithuania the CPI increased 0.7 percent year-on-year in May, up from 0.4 percent in April. Meanwhile in Latvia, the hardest-hit of the three countries, the CPI decline ebbed in May to -2.3 percent year-on-year from -2.7 percent the previous month.
“In general, we expect cost-push inflation to accelerate in the Baltics in the coming months. Negative domestic demand has temporarily halted a rapid price increase, but still there is a high risk of a relatively strong pass through of global energy prices to local consumer prices,” Violeta Klyvienė, Danske Bank’s pan-Baltic financial analyst said in a statement to the press.
“It seems that Russian Gazprom is preparing to raise the price of gas in the Baltic countries and this would push inflation into an upward trend especially in Lithuania and Latvia,” Klyvienė said. [/private_subscription 1 month] [private_subscription 4 months]3.8 percent and services rose by 1.7 percent. Manufactured goods went up by 5.5 percent and food products increased by 1.7 percent compared to May last year.
The index was strongly affected by higher gas prices, which made a 28.6 percent jump and energy costs which increased by 10.9 percent.
According to Martin Lindpere, an economist at the Bank of Estonia, the current inflation rate is relatively high against the backdrop of last year’s severe recession and the current excess capacity in the economy.
“Prices still have room for downward adjustment. The price rise, on the contrary, may inhibit the recovery of growth,” Lindpere told the press.
The Estonian Ministry of Economy is positive and expects the increase of inflation to halt in July when the effect of indirect taxes set a year ago will end.
Kristjan Pungas, an analyst at the Ministry of Finance told the press that the inflation may accelerate in June once the sales tax in Tallinn will come into force and the electricity prices rise. After that the acceleration of inflation will slow down.
“The peak of the price rise is estimated to stay in June,” said Pungas.
In the two southern Baltic states inflation is coming on slower.
In Lithuania the CPI increased 0.7 percent year-on-year in May, up from 0.4 percent in April. Meanwhile in Latvia, the hardest-hit of the three countries, the CPI decline ebbed in May to -2.3 percent year-on-year from -2.7 percent the previous month.
“In general, we expect cost-push inflation to accelerate in the Baltics in the coming months. Negative domestic demand has temporarily halted a rapid price increase, but still there is a high risk of a relatively strong pass through of global energy prices to local consumer prices,” Violeta Klyvienė, Danske Bank’s pan-Baltic financial analyst said in a statement to the press.
“It seems that Russian Gazprom is preparing to raise the price of gas in the Baltic countries and this would push inflation into an upward trend especially in Lithuania and Latvia,” Klyvienė said. [/private_subscription 4 months] [private_subscription 1 year]3.8 percent and services rose by 1.7 percent. Manufactured goods went up by 5.5 percent and food products increased by 1.7 percent compared to May last year.
The index was strongly affected by higher gas prices, which made a 28.6 percent jump and energy costs which increased by 10.9 percent.
According to Martin Lindpere, an economist at the Bank of Estonia, the current inflation rate is relatively high against the backdrop of last year’s severe recession and the current excess capacity in the economy.
“Prices still have room for downward adjustment. The price rise, on the contrary, may inhibit the recovery of growth,” Lindpere told the press.
The Estonian Ministry of Economy is positive and expects the increase of inflation to halt in July when the effect of indirect taxes set a year ago will end.
Kristjan Pungas, an analyst at the Ministry of Finance told the press that the inflation may accelerate in June once the sales tax in Tallinn will come into force and the electricity prices rise. After that the acceleration of inflation will slow down.
“The peak of the price rise is estimated to stay in June,” said Pungas.
In the two southern Baltic states inflation is coming on slower.
In Lithuania the CPI increased 0.7 percent year-on-year in May, up from 0.4 percent in April. Meanwhile in Latvia, the hardest-hit of the three countries, the CPI decline ebbed in May to -2.3 percent year-on-year from -2.7 percent the previous month.
“In general, we expect cost-push inflation to accelerate in the Baltics in the coming months. Negative domestic demand has temporarily halted a rapid price increase, but still there is a high risk of a relatively strong pass through of global energy prices to local consumer prices,” Violeta Klyvienė, Danske Bank’s pan-Baltic financial analyst said in a statement to the press.
“It seems that Russian Gazprom is preparing to raise the price of gas in the Baltic countries and this would push inflation into an upward trend especially in Lithuania and Latvia,” Klyvienė said. [/private_subscription 1 year]
— This is a paid article. To subscribe or extend your subscription, click here.
