Estonian deflation accelerates in May

Estonian deflation accelerates in May
By bne IntelliNews June 7, 2016

Estonia's consumer price index (CPI) dropped 0.9% in annual terms in May, data from Statistics Estonia showed on June 7.

The reading prolongs a trend of deflation that has run virtually uninterrupted for 18 months, with only a brief break in May 2015. The pace of deflation also accelerated, having dropped back to December's level, which was a 12-month trough.

In monthly terms, consumer prices inched up 0.1% in May, after showing no change in April. That is still a disappointment after monthly rises of 0.8% and 0.7% in March and February, respectively.
As throughout the past year or more, falling prices in the transport and energy and fuel sectors did the most to drive deflation in May. Prices in transport fell 5.9% on the year, with prices in the electricity, heat energy, and fuels segment falling 7.9%. Food prices fell 1.3%. On the other hand, alcoholic beverages became 6.9% more expansive, while prices of clothing and footwear expanded 3.8%.

Despite deflation showing little sign of abating, Estonian CPI is still predicted to come in at 0.8% across 2016, according to the European Commission’s spring economic forecast. The forecast is a revision, however, from 1% published in winter.

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