Editorial: price rise moderate, feelings say otherwise

Photo: Stanislav Moshkov / Õhtuleht

Statistics say one thing, feelings speak otherwise… As TV reporters ask folks in the streets or shopping centres regarding the rise of prices, most say it’s really big. According to statistics, however, last year’s price rise was rather modest, on the average – Estonia’s 2.8 per cent do indeed exceed the two percent goal set by eurozone; even so, compared to our earlier years the tempo has eased. For this year, experts predict especially good times for the consumer.

So why such differing pictures provided by subjective assessments and statistics? One economic-psychological explanation stares at us from the goods-services price shift table. Communication and transport have cheapened. Communications bills we pay once a month; to the gas-station, we go a couple of times a month – that varies. In the grocery store, many are daily visitors... multiple times a week, for sure. And the very foodstuffs, as well as alcohol and tobacco, have become markedly more expensive – at double the average tempo.

Meaning: the stuff that has become more expensive is more often before our eyes; the bills for things that are cheaper – these do we pay less frequently. Humanly speaking, it is natural to overestimate the impact of phenomena we face more often. Counting up the money spent on all goods and serviced, over a longer period of time, the family budget proves to be under less strain than when glancing at the fish counter at the store – that’s what statistics seem to conclude.

For consumers, the shock of last year was the opening up of electricity market. Rather surprising, then, that it made such a small impact on price rise as a whole. Herewith, a word of explanation on why the shock wasn’t stronger. Namely: with the electricity market, under strict state control, the tendency is to postpone investments, pushing these to the indefinite future. 

This is because for politicians, it tends to be more advantageous to follow the short-term consumer interests, rather than thinking about prices down the road. The relative smallness of the shock serves to show that the much-reviled earlier governments and parliaments have (against expectations?) acted responsibly.

Regarding the long-term view, it’s definitely vital for us to have energy connections with Nordic Countries, while having power lines not blown down by any appearance of wind. Even so, while the state had determined the prices, the savings have come on account of investments.

For 2014, energy prices have no shock up their sleeves; overall price rise should prove even more moderate than last year. Without too much risk, we may forecast, that the year will be good for the consumer. Who knows, maybe this will be the year the man on the street will reassess price rise?