OREANDA-NEWS. June 05, 2009. According to Statistics Estonia, the cost of the Estonian consumer basket remained unchanged in May and was 0.3% lower year-on-year.

Contracted demand caused by declining economic activity has mainly curtailed corporate profits but also wages, though to a smaller extent. In May enterprises managed to reduce stocks by nearly a tenth.

Companies have cut their costs, but they have so far not changed mark-ups. Thus, the data of Statistics Estonia on the first quarter of 2009 show trading companies' margin was 19%, having not changed much year-on-year. Although the margin may fluctuate considerably across economic activity, the mark-up of retailers amounted to an average of 24% and this has not changed compared to the rapid growth years.

Inflation has slowed also in the external environment. Preliminary estimates show euro-area prices remained unchanged year-on-year. Longer-term inflation expectations do not indicate considerable changes, either.

The price of oil has taken an upward trend again, bringing along fuel price rises. Prices related to food and housing continued to decline in May.

The May inflation rate is in compliance with Eesti Pank's inflation forecast, which expects this year's annual average price decline to be 0.5%.