The CPI inflation in October was 1.5% y/y, Statistics Estonia reported. The indicator moderated notably compared to 3.4%, 2.9% y/y, and 2.1% y/y seen in July, August, and September respectively. In m/m terms, the change of the consumer price index was -0.3% in October.
To remind, average consumer price increase for 2012 overall stood at 3.9% y/y, while in 2011 average inflation was 5%, in 2010 average inflation was 3% vs. 0.1% deflation in 2009 and 10.4% inflation in 2008.
Consumer price inflation in October was as usual influenced the most by electricity and food. After deregulation of the electricity market as of January 2013 electricity prices have been constantly high (30% y/y in October). At the same time in the reporting month 6.1% y/y decline in transportation prices cancelled about a half of the increase caused by food and utilities.
Goods became 0.8% y/y more expensive in October and services 2.9% y/y more expensive. Regulated prices of goods and services declined by 1.6% y/y and non-regulated went up by 2.6% y/y.
The Bank of Estonia commented that October’s slowdown in consumer prices is in line with the reduction of economic activity. At the same time, inflation moderation is becoming more broad based as compared to previous months. Last month the CB reiterated its 3% average HCPI forecast for 2013 (revised downwards in June from previous 3.6%).
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