OREANDA-NEWS. April 11, 2013. Data from Statistics Estonia show that inflation in Estonia slowed somewhat in March, from 3.7% to 3.5%. Leaving aside the price growth of electricity, the 2.3% increase in the price of other goods and services was relatively modest.

One reason behind the slowdown in inflation was the last year’s high reference base for oil prices. As a result, the cost of fuels cheapened by 3.6%. The same factor affected inflation in other euro area countries as well, so Eurostat’s preliminary estimate is that inflation in the euro area slowed to 1.7% in March.

The Estonian CPI rose 0.7% in March compared to February. The price growth of food made up nearly half of the month’s inflation. Seasonal factors caused the price of vegetables and fruit to go up by 9% and alcoholic beverages became 2.3% more expensive. Unprocessed food has been the primary source of price growth in recent months, whereas the cost of processed food even cheapened in March, by 0.7%.

The impact of domestic factors on inflation is likely to increase in the second half of the year. Above of all, labour-intensive services can be expected to become more expensive along with growing wage costs. Eesti Pank forecasts this year’s average HICP growth to be 3.6%.