Energy Producer Prices See Sharp Yearly Decline In Estonia

2025-07-22 05:07:49

(MENAFN- Trend News Agency) BAKU, Azerbaijan, July 22. In June, producer prices in Estonia's energy sector declined by 36 percent year-over-year, largely due to the return of Estlink2 to the market in the second half of the month, Trend reports.

The renewed connection brought Estonia's electricity prices more in line with those in Finland. According to Karel Lember, analyst at the Ministry of Economic Affairs and Communications, this is a key development that could help reduce costs in other sectors over the coming months, potentially easing consumer prices more broadly.

Sectors that rely heavily on domestic raw materials saw the highest price increases in June. Food production prices rose by 5.7 percent over the year, while the wood industry saw a 6.5 percent increase.

In contrast, the paper industry experienced a steep 21 percent drop in prices compared to last year.

Currency fluctuations have also become an increasingly important factor. The euro has strengthened by about 10 percent against the U.S. dollar over the past year, reducing euro-denominated prices in sectors where contracts are set in dollars.

Given current trends in currency and bond markets, no strong rebound of the dollar is expected in the near future, suggesting continued price declines in dollar-based sectors.

A positive trend for Estonia has been the continued rise in export prices outpacing import prices, indicating improved competitiveness. In June, export prices in the manufacturing sector grew by 1.7 percent, while import prices remained flat compared to a year ago.

However, oil producers continue to face challenges. In addition to a weakening dollar, they are being squeezed by low global oil prices. Intense competition among producers and uncertainty around international fuel pricing have led to market conditions where even conflicts in the Middle East have not significantly impacted oil prices.

Looking ahead, producer prices are expected to fluctuate modestly within current levels over the coming months.

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