Tallinn - Prices in the recession-hit Baltic state of Estonia fell for the third month in a row, according to data released by the national statistics office on Friday.
Statistics Estonia said the consumer price index (CPI) decreased 0.7 per cent in July 2009 compared to July 2008 but increased 0.9 per cent compared to June 2009.
Food products were 0.4 per cent and manufactured goods 4.5 per cent cheaper than last year as weak local demand forced retailers to cut costs.
Milk and dairy product prices fell 14.4 per cent, adding to many dairy farmers' fears that they cannot make a decent living.
Tax changes introduced by the minority government of Andrus Ansip intended to raise revenues and keep Estonia on track to adopt the euro in 2011 affected the index, too.
'The consumer price index in July was also definitely influenced by the rate of value added tax (VAT) that was raised from 18 per cent to 20 per cent. This brought along a large-scale price correction in the majority of commodity groups,' the statistics office said.
Estonian consumer prices drop for the third month in a row