Analytics, Estonia, EU – Baltic States, Financial Services, Inflation

Jürgen Ligi.

“There will be the effect of rounding and retailers have a temptation too, but for that, there is major experience from other states about how to block that, there is a number of procedures for that. There is the fair price design measure, there is the declaration that the Chamber of Commerce and Consumer Protection Board together are designing and there is parallel posting of prices,” Ligi said in ETV’s talk show Forum Wednesday evening.

Thanks to parallel posting of prices in both euros and kroons, that will be obligatory six months before adoption of the euro, people can see early on what goods will cost in euros. Ligi said that the planned sales tax in Tallinn might mess up things a bit but general studies show that “we don’t have the room for price increases for anything substantial to take place”.

Ligi said that prices will increase anyway at some point. “But that won’t be because of the euro,” he said.

In its report published yesterday, the European Commission recommended accepting Estonia as a member of the euro area. Although no final decisions have been made, the officials in Brussels find that it is highly likely that in July Estonia would get an official invitation to adopt the euro. The reports by the Commission and by ECB emphasise, however, that the two major problems threatening Estonia’s economy is the inflation rate and new imbalances in the economic policy.