Europe at reduced price
Index of consumer prices in Estonia has to minus for the third consecutive month, at an annualized calculation.
Thus, prices in Estonia are now 0.7% lower than in July last year. A story that apparently would go unnoticed, while Estonia is a small and remote country. Only that deflation trend emerged in Estonia spread on the continent, and prices across Europe are declining.
Normally, the news announces that “inflation was X percent.” To announce that “deflation is 0.7%” may seem an expression totally moved. However, this expression tends to become usual in the context of global crisis.
The euro area is already in deflation. For June, there was a -0.1% rate, while for July was -0.6%. Figures are not worrying. But Estonia, in turn, announced an annualized deflation of -0.7%. It is the third consecutive month when the numbers come from Estonia with minus in front.
Areas that went for annualized minus are sufficient to analyze the Estonian consumer behavior:
- Fuel: -19.8%
- Food products in general: -5.1%
- Milk: -14.4%
- Alcohol and tobacco: +13% (mainly due to excise increase)
The current situation is only an introduction. Panic might be installed only after the publication of dates for the month of August.
