Based on the data of the Statistical Office, consumer price growth picked up speed again in August and commodities and services were 5% more expensive year-on-year. According to Andres Saarniit, Counsellor of the Economic Department of Eesti Pank, this figure is bigger than expected, representing the highest inflation indicator this year. The rise in inflation results from both the rapid economic expansion and wage growth as well as the hike in food prices, which is atypical of August.

"Month-on-month, the consumer basket was 0.8% more expensive. All the main groups of goods and services witnessed a considerable price increase. Although motor fuel prices are currently declining, the inflation indicator echoes the fuel price increase that took place in the first half of the month. It does not yet reflect the global downward trend in the price of crude oil that started in the second half of August," Saarniit said.

Housing costs have gone up more than 10% year-on-year. The August price hike already includes the rise in thermal energy prices due to the approaching heating period.

Although it was not a surprise to discover weather had not favoured agriculture and horticulture, the increase in food prices still exceeded expectations. "Usually, food prices decline in August (in both 2004 and 2005, food prices declined by 1-2% in August), but this year they went up 0.5% month-on-month," Saarniit commented.

Compared to the European average, housing costs and food make up a much bigger share in the Estonian consumer basket. The euro area saw a slight decline in consumer prices in July and August. According to preliminary estimates, the consumer baskets of other euro area countries became 2.3% more expensive year-on-year. In Estonia, oil price fluctuations have a much stronger effect, thus noticeable inflation rate changes can be expected in the next months as well. Inflation should fall below 5% in September, added Saarniit.