OREANDA-NEWS. December 12, 2011. According to Statistics Estonia, the November CPI showed a 0.1% price growth, having increased by 4.2%, year-on-year. Inflation in the euro area was 3% in November, according to Eurostat's preliminary estimate, reported the press-centre of Eesti Pank.

Inflation slowdown in Estonia shows that economic growth is losing impetus and inflationary pressures from the external environment are easing. During the past six months, the price level in Estonia has grown by 1.3%. At the same time a year ago, price growth was 2.5%.

The Estonian labour-market situation has improved, since the number of the employed has gone up. Wage growth acceleration accompanying this development has stepped up consumer purchasing power. However, it is likely that the consumption decisions of the Estonian households have been withheld by the deteriorating external economic outlook.

Global commodity prices have put no pressure on price growth in Estonia since spring. The near-term price growth of energy sources is attributable to the earlier oil price increase.

In 2012, the sales tax on several products and services in Tallinn will be abolished. The impact thereof on counter prices depends on the stiffness of competition and on the extent to which it used to affect counter prices. In general, indirect tax increases will be borne by consumers, at least partly.