Estonian CPI drops by record 2.2 pct y/y

TALLINN, Nov 6 (Reuters) - Estonian consumer prices fell 2.2 percent year-on-year in October, the first time the index has fallen more than two percent over the 12-month period in the recession-hit Baltic state. The consumer price index fell 0.1 percent month-on-month in October, data showed on Friday. The falls were close to expectations: the median forecast in a Reuters survey was for a 2.1 percent fall year-on-year and a 0.06 percent month-on-month drop. "Compared to the same month of the previous year, the consumer price index decreased for the first time by more than 2 percent," the statistics office said in a statement. In September, Estonia reported a year-on-year price fall of 1.6 percent. "Compared to October of the previous year, the consumer price index was mainly influenced by the price decrease of food by 6.9 percent, of which dairy products accounted for over a third and vegetables for more than a fourth," the office said. It added that housing rents have fallen by 33 percent and the price of heating was 11 percent lower compared to the same month of the previous year. The country has gone from near double-digit inflation to sharply falling prices as the economy is expected to shrink by 14.5 percent this year. The government hopes that falling consumer prices will help meet a target of adopting the euro at the start of 2011. It has also been fighting to cap the budget deficit. (Reporting by David Mardiste; Editing by Jan Dahinten) Keywords: ESTONIA ECONOMY/INFLATION (Tallinn Newsroom, [phone], [e-mail], Reuters Messaging: [e-mail]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

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