Estonian October CPI slips below 10 pct

Estonian consumer price inflation fell below 10 percent in October for the first time since the end of last year, data showed on Friday.

The rate of price rises in the small Baltic state have been easing as the economy has slowed sharply. The government hopes inflation will ease further so Estonia can be ready to adopt the euro in 2011.

The consumer price index rose 9.8 percent year-on-year in October with a 0.4 percent rise on the month, the state statistics office said in a statement.

Inflation was last below 10 percent in December, at 9.6 percent.

The office said the 0.4 percent monthly increase in October was driven mostly by increases in the price of heating and natural gas, both of which rose more than 20 percent, counterbalanced by a fall in automotive fuel prices.

"Compared to October 2007, the index was mainly influenced by expenditures on housing, which accounted for over a quarter of the total change and of which the price increase of the heat energy gave two thirds," the office said.

It added that food, alcoholic beverages and tobacco each accounted for about a fifth of the total yearly increase.

Analysts in a Reuters survey had forecast monthly inflation at a median of 0.6 percent and annual inflation at 10.0 percent.

Estonia and the other two Baltic states and their banks have been hit by ratings or outlook cuts by ratings agencies due to macro-economic imbalances, such as high inflation, high current accounts and worries the countries will suffer a sharp slowdown.

Estonia increased excise duties on heating costs during 2007 and on fuel from January 1 2008.

Source http://fxstreet.com/news/forex-news/article.aspx

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