Estonia's consumer price index (CPI) dropped 0.1% in annual terms in July, data from Statistics Estonia showed on August 5.
The reading prolongs a trend of deflation that has run virtually uninterrupted for 18 months, with only a brief break in May 2015. At the same time, the pace of deflation has been slowing down since May this year, and the July reading puts the CPI drop at its slowest in over 12 months. In June, prices fell 0.4%.
In monthly terms, consumer prices did not change in July, after expanding 0.3% the previous month. As through the past year or more, falling prices in the transport and energy and fuel sectors did the most to drive deflation. Prices in transport fell 5.1% on the year, including a 10.6% drop of petrol prices and 4.6% reduction in prices of diesel.
In the energy sector, heat and gas prices fell by 9.5% and 15.2%, respectively, while electricity became 4.6% cheaper. Food prices grew 1.1%, while prices of clothing and footwear expanded 5.8%.
Estonian CPI is predicted to finish the year at 0.8%, according to the European Commission’s spring economic forecast. The forecast is a revision from the 1% forecast in winter, but still appears somewhat high.