The consumer basket was 3.2% more expensive in August than a year earlier. Inflation this month was held back by a 2.9% year-on-year decrease in energy prices. Leaving the volatile energy prices aside, the consumer basket was 4.4% more expensive than a year ago.

Cheaper energy has subdued general inflation. In August, the oil price fell under 80 dollars a barrel, while the price of motor fuel decreased also thanks to a fall in the profit margins of oil refineries and the strengthening of the euro. In early September, the oil price on the world market has been the cheapest it has been in years and energy can be expected to dampen general inflation in the near term as well. In August, the price of electricity in Estonia was still higher than it was in the Nordic countries, reaching 100 euros per megawatt hour. The partial functioning of the Estlink 2 cable has decreased the price of electricity over the past few days. As we approach winter, electricity may still increase in price again due to higher consumption.

Services inflation reached 7.5% in August, year-on-year. Services inflation is usually lower in the second half of the year due to seasonal reasons, as the prices in the tourism industry decrease. The prices of goods increased 2% in a year, which is the same as the rise in VAT. Among manufactured goods, the prices of clothing and footwear were 4% lower in August than they were a year earlier. These prices are falling for the first time since 2021.

The prices for production inputs have started to climb up and the pressure to raise the prices of manufactured goods is growing. Annual import prices started to rise in May, while producer prices did so in July. The prices of agricultural commodities and food have stood out among import prices for their high inflation. For example, the price of butter on the European Union market has risen and reached record highs again. The price increases in manufacturing products have been led by wood, machinery and electronics prices. However, in the construction sector, prices remain a bit lower than they were last year.

According to the Eesti Pank forecast, inflation will reach 3.8% this year. Eesti Pank will publish its next economic forecast and inflation outlook on 24 September 2024.

Additional information:
Hanna Jürgenson
Communications Specialist
Eesti Pank
Tel: 5692 0930
Press enquiries: [email protected]