Inflation accelerated to 11 percent, the highest since April, 1998, from 9.6 percent in December, the statistics office based in the capital Tallinn said on its Web site today. In the month, prices rose 2.2 percent.
``The increase was led mainly by different types of administrative price increases, like excise tax hikes, heating, bus fares, sewage tariffs,'' Maris Lauri, the chief economist with Hansabank Markets in Tallinn, said ahead of the report.
Accelerating inflation triggered by rapid economic growth and a consumer spending boom is increasing the risk of an abrupt slowdown in Estonia, analysts including Lars Christensen from Danske Bank A/S have said.
Both the central bank and the finance ministry say inflation will slow in the second half of the year when the effect of tax increases wanes. The increases were announced in April 2007.