- Cheaper energy behind the decline in prices
- Inflation expected at around 1% in 2016
Consumer prices decreased by 0.5% in Estonia in 2015. Consumer prices declined due to lower energy prices. Motor fuels were 14%, heat energy 4%, and electricity 4%, cheaper than in 2014. On global markets, crude oil prices were around 40% lower than in 2014 in EUR (around 50% cheaper in USD).
Food prices declined by 0.5% in Estonia in 2015. Food prices decreased around the world for the fourth year in a row in 2015, in USD terms, according to FAO. A decline in food prices by around a fifth last year was caused by abundant supplies in the face of a timid world demand and an appreciating US dollar. A hike in excise taxe rates lifted the prices of alcoholic beverages, which had the biggest positive contribution to the CPI in Estonia in 2015.
According to our estimates, in 2016, consumer prices are expected to grow by around 1%, of which 0.7 percentage point is a direct impact from higher excise taxes on alcohol, tobacco, motor fuels and natural gas. The prices of services will be pushed higher by a rapid growth in wages.