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Thursday, October 9, 2008

Estonia's Inflation Comes Down (slightly) As Unemployment Rises (a bit)

Estonia's inflation rate fell in September to the lowest level this year as fuel and food prices declined. The rate declined to 10.5 percent, the lowest since December 2007, from 11 percent in August, according to the latest data from the statistics office in the capital Tallinn. Month on month prices were up 0.6 percent, mainly because of rising alcohol and tobacco prices after an excise tax increase in July.

Lower fuel costs cut transport prices by 1.3 percent in the month for an annual increase of 12.1 percent. Food prices eased 0.3 percent from August to cut the annual gain to 13.9 percent. Alcohol and tobacco prices rose 7 percent in the month, gaining 26.7 percent on the year.

Unemployment Edges Up

Estonia's registered unemployment rate rose to the highest level in more than three years in September as Estonia's recession continued to deepen. The jobless rate, based on the number of unemployed registered with labor offices, rose to 3.1 percent, the highest since July 2005, from 2.9 percent in August, According to the Estonian Labor Market Board. The number of people signed on as seeking a job rose 6.6 percent from the previous month to 20,015, it added.

Lower consumer spending and weaker industrial output pushed Estonia into a recession in the second quarter as gross domestic product shrank for two quarters following the onset of a sharp credit crunch. Unemployment, which usually follows changes in economic output with a time lag, is expected to rise considerably from current levels.

The unemployment rate as measured by the Estonian statistics office in quarterly labor surveys, may rise as much as 10 percent by the end of 2009 from a 16-year low of 4 percent in the second quarter, according to estimates from Erkki Raasuke, head of Baltic operations for Swedbank AB.

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