TALLINN - Estonian consumer prices rose 11.0 percent year-on-year in August with a 0.1 percent rise on the month, the state statistics office said on Friday. The government and central bank are hoping that the country's rapid inflation has passed its peak from a 10-year high of 11.4 percent reached in April and June this year. High inflation has added pressure to an already sharply-slowing economy that slipped into recession in the second quarter of 2008. The 0.1 percent monthly increase in August was slower than the 0.7 percent increase in July due to cheaper motor fuel costs and the seasonal decrease in the price of vegetables. Four analysts in a Reuters survey had forecast monthly inflation at a median of 0.2 percent and annual inflation at 10.98 percent. The yearly index was influenced mainly by rising food costs, higher motor fuel prices accompanied by a rise in transport prices, an increase in housing expenditure, as well as higher alcoholic beverages and tobacco prices.
'Annual price increase of food and transport accounted for a half, housing for a sixth, and alcohol and tobacco, the rates of excise duties of which had increased, for nearly an eighth of the total percentage change,' the statistics office said in a statement.
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 problems such as high inflation 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. Fuel use is weighted heavily in the local price inflation index calculation compared to other European Union states.
Reporting by David Mardiste ; Editing by Andy Bruce
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