Inflation in Estonia will decelerate to 3% next year as a result of the halting of price increases in energy, Swedbank senior analyst Liis Elmik said, commenting on September inflation data.
The biggest contribution to the 3.7% increase in the price of the consumer basket was made by energy. The prices of electricity, fuel and motor fuel alike moved higher. The price rise in food accelerated to almost 4% in September mainly as a result of vegetables becoming more expensive, Elmik said in a press release.
Electricity was one-tenth more expensive in September than in the same month last year. The reason for the increase was inputs: solid fuels, carbon dioxide quotas, and maintenance, which reduced supply on the Nordic electricity exchange.
"Rainfall in the autumnn, meanwhile, has slowed down the increase in electricity prices — higher water levels enable to generate more electricity at the Nordic power plants, and bigger supply means lower price," the economist added.
The price of motor fuel has grown on the back of higher excise duty rates and global oil prices. The price of oil hit a four-year high as a result of the sanctions imposed by the United States on Iran. According to Swedbank's estimates, the price of oil will remain above $70 per barrel this year and decline somewhat in 2019.
Despite rapid price increases, the standard of living of employees in Estonia is improving as well, Elmik said. The average gross wage is increasing at approximately two times the rate of increase in prices.
According to Swedbank, the average gross wage will increase about 7% this year and approximately 6% in 2019.