According to Statistics Estonia, prices rose by 1.9 percent in July compared to the previous month and by 22.8 percent compared to the previous year.
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In the euro area, the increase in prices accelerated to 8.9 percent according to the preliminary estimate.
The increase in consumer prices is reaching new peaks, and it is the fastest in the euro area in the Baltic countries. In countries where pricing is more flexible and contracts are shorter, price changes also arrive faster.
In some European countries, the increase in energy prices for household consumers has been quite modest. A higher price level with a longer referrer is transferred there.
Globally, inflation has turned out to be faster than expected, and this also means stronger intervention by national central banks in the economy by raising base interest rates.
However, this is taking place at a time when the growth prospects of the global economy have become fragile. Market participants' increased fear of a possible economic downturn has begun to manifest itself in the price of some raw materials. Consumers will feel this primarily in the decrease of fuel prices from their high level in June.
However, the outlook for the European economy is affected to a greater extent by increased risks regarding gas supply and the resulting increase in wholesale gas prices. Due to the lack of affordable controllable power generation capacities, gas power plants in turn shape the price of electricity, the prices of which future transactions are climbing higher and higher by the beginning of autumn and winter.
As a result of the electricity deficit in the Finnish-Baltic region, which also has its share in the limitation of Russian electricity imports, the stock exchange price of electricity will be almost twice as high compared to the peak in December of last year.
Considering that the electricity price index in the consumer basket largely depends on the stock market price and that the high wholesale gas prices are reflected in the bills of household consumers in the fall, we have postponed the high level of inflation to the second half of the year.
Price developments in services and manufactured goods indicate that price increases are becoming more and more broad-based. The increase in the price of inputs and strong demand are raising the prices of services, which accelerated to almost 13 percent in July.
While rental prices jumped in the spring, several services related to leisure and travel have rapidly increased in price, especially in recent months. Vacation packages have become more expensive by a third and accommodation by a fifth.
Although the cooling of the economy should start to limit the price pressure in some sectors in the near future, the expected continuation of the increase in the price of some energy carriers will increase household expenses.
A slowdown in inflation could be expected next spring based on current futures. ■