Prices of goods leaving Estonian factories and mines rose an annual 8 percent in March, the least in twelve months according to data from the Estonian statistics office this morning. Producer-price inflation, which may be regarded as an indicator of competitiveness and an early indicator of the future path of consumer inflation, slowed from 8.3 percent in February. Prices rose a monthly 0.1 percent, compared with 0.7 percent in February. So - as we can see from the chart - since peaking at 9.1% last October producer price inflation has been slowing, but the pace has been painfully slow.
Perhaps more to the point the percentage change in the export price index in March was 0.2% compared to February and 6.4% compared to March 2007, while the percentage change in the import price index was 1.1% compared to February 2008 and 5.2% compared to March 2007. Again as we see from the chart the rate of increase in export prices is virtually stationary at the moment, which means effectively (with the kroon pegged to the euro) that Estonian exports are becoming less competitive by the day.
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