Inflation in Estonia has remained above the euro area average mainly because prices have risen for energy and food. Data from Statistics Estonia show that consumer prices in January were 11.3% higher than a year earlier. Average inflation in the countries of the euro area at the same time was estimated at 5.1%.

The price cap set by the government on some energy prices for households restrained inflation in January and will do so further in the coming months. At the same time, the oil price has risen rapidly on global markets, giving an additional boost to the rise in the price of the consumer basket.

Food prices were up 8% in January. The cost of the whole food basket has risen, with prices increasing particularly for dairy products, coffee, and cereal and flour products. Food prices are up not just in Estonia, but throughout Europe, as food price inflation in the euro area averaged 3.6%.

High inflation is eating into economic growth. The Estonian economy is performing quite well, and the recovery from the trough of the pandemic crisis has been faster than in most other euro area countries. Production volumes have increased strongly and the utilisation rate for production capacity in the economy is high. This is also reflected in the labour market by low unemployment and rapidly rising wages. Prices will rise faster than wages in the first half of this year, which will reduce purchasing power and limit growth in consumption. Prices pressures and their constricting effect on the economy are expected to ease in the second half of the year.

Additional information:
Ingrid Schmuul
Communications Specialist
Eesti Pank
Tel: 668 0965, 5697 9146
Press enquiries: [email protected]