“Core inflation continues to be driven by various administrative price increases. Considering the VAT increase over the year, the underlying price growth, excluding taxes, in Estonia is not particularly low,” commented the latest data by Luminor’s chief economist Lenno Uuskula.
“However, in May, the monthly price growth accelerated. The last time we saw such a large monthly price increase was in August last year, when VAT was raised, or in February last year, considering seasonal factors,” he noted.
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According to L. Uuskula, the faster price growth in May was caused by the pass-through of higher energy and raw material prices to consumers, related to the crisis in the Strait of Hormuz. However, he added that various one-off factors, which may weaken next month, could also have significantly contributed to the monthly price increase.
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