Consumer prices were up 3.5% on a year earlier in September, and were 0.9% higher than in August. Rising energy prices drove inflation upwards. Inflation was moderate without the effect of energy prices and there is no sign of price pressures increasing more broadly.

Motor fuels alone provided almost half of yearly inflation in September. Not only is crude oil around 70% more expensive in euros than it was a year earlier, but the refining margins for fuels have increased this year and now account for around a fifth of the price of fuel. Prices for motor fuels also rose sharply in Estonia’s neighbours in September. Fuel excise was cut in Latvia from October until the end of the year, bringing fuel prices down to the same level as in Estonia. Lithuania continued to have the highest prices in the Baltic states for motor fuels.

Within the costs of energy for housing, the sharpest rise in price over the year was for natural gas, which was up by 38%. Inflation for heating remained at an unchanged level. Higher gas prices may raise the price of district heating once the heating season starts, though that will vary by district as a lot of district heating networks mainly use biomass or waste heat. Favourable weather conditions meant that the average exchange price for electricity in September was lower than it was a year earlier. Consumer prices still went up for electricity though, as the end price is affected by the fees that have been introduced this year for balancing capacity and security of supply, and by changes to monthly fees.

Food prices continued to restrain overall inflation, and were lower in September than a year before. Higher producer prices for food indicate though that prices may not continue to fall. Dairy products, oils and fats, and fruit were still cheaper than they were a year previously, while vegetables were more expensive. The different movements in food prices arise from seasonality and from promotions for individual products. Rising production costs could reach consumer prices with a lag, and the extent that they do so will also depend on competition between retailers.

Inflation remained low in September if energy costs are excluded. Yearly inflation for services has fallen sharply from its level of 10% last year, and was 2.3%. Energy prices remaining high will increase production and transport costs for businesses and will gradually drive up the prices of other goods and services.

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