Estonia Central Bank: Rising Fuel Costs to Drive Inflation Spillover
Lauri Matsulevitš, an economist at the Bank of Estonia, warns that rising fuel prices are a primary driver of inflation and will likely spill over into other sectors. Consumer prices in Estonia rose by 3.4 percent year-on-year in April, with energy costs contributing significantly to this increase. The surge in motor fuel prices is attributed to supply disruptions in the Persian Gulf region caused by the war in Iran, which has particularly impacted diesel supplies. Diesel prices increased by over a third compared to the previous year, while gasoline rose by 10 percent. Although high prices typically reduce consumption, fear of further hikes led to stockpiling in March. Matsulevitš notes that if air travel becomes prohibitively expensive due to jet fuel shortages, domestic tourism may increase. Conversely, train travel prices are expected to drop in May. While food price growth has slowed and electricity stock prices have fallen, the VAT increase implemented last year will continue to influence annual price growth until July. Excluding tax changes, Estonia's inflation rate remains among the lowest in the eurozone.
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Estonia Central Bank: Rising Fuel Costs to Drive Inflation Spillover
Lauri Matsulevitš, an economist at the Bank of Estonia, warns that rising fuel prices are a primary driver of inflation and will likely spill over into other sectors. Consumer prices in Estonia rose by 3.4 percent year-on-year in April, with energy costs contributing significantly to this increase. The surge in motor fuel prices is attributed to supply disruptions in the Persian Gulf region caused by the war in Iran, which has particularly impacted diesel supplies. Diesel prices increased by over a third compared to the previous year, while gasoline rose by 10 percent. Although high prices typically reduce consumption, fear of further hikes led to stockpiling in March. Matsulevitš notes that if air travel becomes prohibitively expensive due to jet fuel shortages, domestic tourism may increase. Conversely, train travel prices are expected to drop in May. While food price growth has slowed and electricity stock prices have fallen, the VAT increase implemented last year will continue to influence annual price growth until July. Excluding tax changes, Estonia's inflation rate remains among the lowest in the eurozone.
The Baltic Times