Estonia’s annual PPI inflation amounted to 3.4% y/y in May 2013, down from 4.6% in April, 4.3% y/y in January and 4.4% in February, data published by Statistics Estonia shows. PPI in y/y terms has been moderating in the past two years to 2.1% in December 2012, but rose in Jan-Feb 2013 on higher prices of electricity as a result of the deregulation of the electricity market that took effect as of 2013.

This trend is confirmed also by May’s data, with y/y increase in prices of electricity, gas, steam and air conditioning supply increasing by 19% y/y (34%-35% y/y in April-March). Manufacturing PPI, at the same time, remained stable at 1.7% y/y in May after 1.6% y/y seen in March and 1.1% y/y in April.

Commenting on Q1 CPI data, the Bank of Estonia recently said that prices of goods were stable if not accounting for electricity prices. CPI inflation amounted to 3.5% y/y and 0.7% m/m in March 2013 (3.7% y/y and 0.6% m/m in February). The electricity price, which rose by 30% y/y, has a major impact on the consumer price increase during the month.