Inflation picked up last year due to higher commodity prices and an increase in excise tax rates. Higher excise taxes added 0.9 percentage point to inflation in 2017.
Among different products and services, food and non-alcoholic beverages contributed the most. The prices of food products grew due to bad weather and higher demand in Europe. Higher excise tax rates pushed up the prices of alcohol, tobacco, and motor fuels. Motor fuels’ prices were also lifted by more expensive crude oil. Crude oil price grew by around 20% in euros in 2017.
Consumer price growth is expected to decelerate to around 3% in 2018 as external price pressures ease – prices of oil and other commodities are expected to grow less than in 2017. Food, alcohol, and tobacco products will contribute the most.
Wages are forecast to grow faster than prices also this year. In addition, wage-earners’ labour income will jump up due to a substantial increase in their nontaxable income. Net wages in real terms should grow by around 9% in 2018.
