RTTNews - Consumer prices in Estonia fell annually for the first time on record in May, the Statistics Estonia said Friday.
In May, consumer prices declined 0.3% year-on-year, in contrast to a 0.3% rise in April. During the month, transport prices showed the steepest decline of 10%, followed by a 4.8% drop in prices of food and non-alcoholic beverages. Communication costs were down 1%. At the same time, the fastest rise in prices of 18.6% was in alcoholic beverages and tobacco.
Month-on-month, consumer prices remained flat in May, after falling 0.7% in the preceding month. The statistical office said the consumer price index on a monthly basis was influenced by a rise in motor fuel prices along with continuous price declines in heat energy and food, especially those of dairy products.
Commenting on the latest inflation data, Bank of Estonia economist Martin Lindpere said in a statement that the May inflation rate was in compliance with the central bank's inflation forecast, which expects this year's annual average price decline to be 0.5%.
In a note, the Danske Bank senior Baltic analyst Violeta Klyviene said the bank expects a continuation in the downward trend in the CPI over the coming months, persisting until 2010. Returning to positive dynamics will not be possible without a return to positive growth. For 2009, the bank sees a CPI decline of 0.6%.
At the same time, the Danske Bank said the latest GDP numbers indicated a very weak performance in the Estonian economy. Growth is not expected to resume before 2011, the analyst said.
The latest figures from Statistics Estonia showed that the GDP contracted 15.6% year-on-year in the first quarter, after a 9.7% fall in the fourth quarter. Sequentially, the GDP fell a seasonal and working day adjusted 6.5% in the first quarter.
Meanwhile, the IMF, last month said the Estonian economy was likely to contract 13% in the current year, with recovery to start at the earliest by late 2010.
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