Estonia's consumer price index (CPI) grew 2.2% in annual terms in December, data from Statistics Estonia showed on January 6. The strong gain leaves overall price growth in 2016 just inside positive territory at 0.1%, albeit the reading is well below forecasts.
The December result saw CPI in positive territory for a fifth consecutive month, and at its highest since September 2013. Deflation had dominated between May 2015 and July 2016. In monthly terms, consumer prices gained 0.4%, largely due to growing prices of food as well as in the transport sector.
Unlike in recent months, when growing prices of alcohol and tobacco products drove the gains in Estonian CPI, the annual increase in December was primarily driven by rising prices of motor fuels, Statistics Estonia notes. Prices in transport rose 5% y/y overall.
Alcohol and tobacco products still gained in December, rising 6.4% due to a hike in excise duty introduced earlier this year. Food prices grew 1.1% overall.
Throughout the year, prices of alcohol and tobacco expanded 6.4%; the biggest drop – of 8.1% - came in the education sector. Transport prices fell 3% acorss 2016, while food prices did not change.
Estonian CPI was predicted to finish the year at 0.5%, according to the International Monetary Fund. The European Commission predicted price growth at 0.8%.
In line with forecasts that global inflation will return with a bang in 2017, Estonian's are likely to see a serious acceleration in prices this year. The pace is likely to be even higher in Estonia than the average for the Eurozone, suggests Eesti Pank, primarily because of rises in excise. The central bank plots average inflation for 2017 at 2.8%.