Estonians face biggest price rise in eurozone

How to curb galloping inflation in Europe? The governors of the European Central Bank meet Thursday, June 9, and could decide to raise interest rates. The aim is to curb the rise in prices, by 8% on average in the euro zone. In France, we are at just over 5%, very far behind the Baltic countries, in particular Estonia, where inflation exceeds 20%! A record in the European Union. There, to realize the inflation, it is enough to go to the exit of a supermarket, as in the district of Nomme, a rather popular district of the capital, Tallinn.

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In the typical Estonian shopping cart, there are cold cuts, sausages, milk, chicken, and then fish, especially salmon, caught in the Baltic Sea. All these products have taken more than 15% on average for a year. Many Estonians cannot keep up, like Oksana and Artur. She does not work, he has a small salary as a construction worker. This young couple leaves the supermarket with a barely full shopping bag. “We just bought butter, black bread, it’s an Estonian speciality, and croissants; and it cost us 15 euros!”, complains Oksana. “These are everyday products, underlines Arthur. The milk increases enormously, the ice cream too… Take the potatoes, I bought some on Monday. The next day, at the same place, they were already 20 cents more. Prices are rising very quickly.”

“Beside that, my salary does not increase. My boss tells me that it is impossible, that he does not have the means.”

Artur, Estonian

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Oksana and Artur reduce their shopping to the strict minimum, and come to this rather inexpensive hypermarket to try to save some money. It’s still too expensive for Jelena, a mother in her forties: “Meat is overpriced. And then fish, especially salmon. It increases by one euro, here and there. It’s the same for fruit. At the end of the month, I no longer have money, so I have to be very careful.”

To the increase in the shopping budget, we must also add gasoline. And in Estonia, unlike France, there is no discount at the pump. As a result, diesel and unleaded took 55% for the first, 40% for the second, in one year. Most stations in the capital display at least two euros per liter of unleaded 95 in early June. As a result, public transport is experiencing unprecedented crowds, even exceeding pre-Covid attendance. “I now take the tram more, and the bus, to go to work”thus describes Silvia.

As in France, this inflation in this European country is mainly explained by energy. But there, the difference is that for half of the Estonians, their contracts are not at a fixed price. They vary according to the prices of these energies on the Stock Exchange. And so, when they explode in the markets, like right now, it’s dramatic. To realize this, direction Kiisa. A village, south of Tallinn. Its wooden houses on the edge of a forest, a bucolic setting. But for the past few months, it’s been a money pit for Daisi. This mother of two is very angry with the national electricity company: “She does not lower the prices while the company is making huge profits, and its managers see our difficulties! In April and May, I had to pay almost 200 euros per month for electricity and heating. So that in 2021, at the same period, the bill amounted to a maximum of 60 euros per month! It’s madness!”

“And again, my house is pretty well insulated. I’m worried about the fall, and for next winter. Here, the temperature can drop to -25° C or -30° C. My bills will explode , and I have to pay them. What am I going to do?”

Daisi, Estonian

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To save money, Daisi will probably sell his car, and go to work by train. She is employed in the town next door, in the shop of an internet operator. And then his children, two young teenagers, are independent: “My children use their bikes, or their legs. And me too, fortunately, I am in good health, explains Daisi. But it is unfair! Today, I earn 900 euros per month. It is possible to live on such a salary.” The average salary in Estonia is well above, 1,600 euros per month.

In Estonia, there is a form of tariff shield which has been introduced on electricity and gas prices. But unlike France, it stopped at the end of March.
For more than two months, Estonians have taken the brunt of the explosion in market prices. This explains such inflation. Only one device is still in place today. Energy checks, reserved for the most modest, and paid for the first time this year. You can be reimbursed up to 500 euros per month depending on your income and the amount of your bills. To do this, you must submit a file to your city. In Tallinn, social services, overseen by Betina Beskina, are overwhelmed with requests: “Since the beginning of January, we have received 37 000 requests for energy vouchers. This is huge for a city like Tallinn, which has just under 450 000 inhabitants ! We were expecting a tsunami, we saw it coming, and it’s here. We had to hire 30 people just to analyze and respond to requests. We opened a support number, which received thousands of calls.

In Estonia, the price of gas has tripled, electricity more than doubled. Aleksandra, she saw her bill increase “only” by 30 to 40% compared to 2021. A freelance translator, her monthly income is very variable, and she is raising her three-year-old daughter alone. “I have already had debts, and paid my bills in installments”she describes.

“There I received 200 euros for the months of October, November and December last. It helps me a lot. Otherwise, I would have had to borrow money from friends, not buy toys for my daughter .”

Aleksandra, Estonian

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Can this double-digit inflation last much longer? Yes, for Mihkel Nestor, economist at Banque SEB According to him, it will exceed 10% at least until the end of 2022. Because of the war in Ukraine, and the sanctions adopted against Russia. The three Baltic countries, Estonia, Latvia, Lithuania, have completely cut off the Russian gas tap for more than two months. They receive it today, in particular from nearby Norway. “We are a small country [1,2 million d’habitants]we need to accommodate only 4 to 5 gas-filled LNG carriers to last the year”believes Mihkel Nestor.

To lower the bill, there is only a short-term solution according to him: “Reinstate the tariff shield that was in place last winter.” Except that Kaja Kallas, the very liberal Prime Minister of the country, is against it. The Estonian state would not have the means, she said.

But the political situation could force her to change her mind. Due to deep disagreements with an allied party in Parliament, Kaja Kallas is currently trying to form a new coalition, including with movements campaigning for massive aid to all Estonians. Furthermore, “there are elections next March”says Mihkel Nestor, “it is surely the right time for politicians to show that they care about Estonians”.