Data from Statistics Estonia show that inflation over the year was 21.3% in November. Roughly equal contributions to inflation came from energy, food, services, and manufactured goods, and prices were 0.9% higher than in October.

The rate of inflation for energy has slowed gradually in recent months. This has been helped by the compensation given by the government for energy prices, which will be paid until March next year.

Although the prices of food commodities on global markets have been falling since the spring, consumer prices for food products are only reaching their peaks. The position of agricultural producers in the European Union has been made harder by high energy prices and unfavourable weather this year. The usual seasonal fall in the prices of food and vegetables in the autumn did not happen this year in Estonia, and prices actually rose.

The Estonian economy has moved into recession, though households have been able to use their savings to keep consuming as usual. The confidence to consume has suffered a heavy blow though, and the first signs of people starting to limit their spending are apparent. Prices for tourism services and rents fell most among services prices in November, having driven the rise in services prices since the pandemic restrictions started to be eased.

Inflation for manufactured goods has remained high in the countries of the euro area though. Many branches of manufacturing around the world continue to be plagued by supply difficulties as a shortage of inputs and insufficient supply means the price pressures cannot subside. High inflation is also pushing the exchange rate of the euro down. Consumers are stocking up on manufactured goods, presumably in fear of future inflation.

Inflation will continue to slow. Average inflation this year has been very high even so, reaching close to 19%. Eesti Pank will publish an updated economic forecast together with the outlook for inflation next year on 20 December.

Additional information:
Hanna Jürgenson
Communications Specialist
Eesti Pank
Tel: 56920 930
Press enquiries: [email protected]