Yearly consumer price inflation came down to 3.1% in February. This was largely because energy prices fell, as inflation without energy prices would have been close to 4%. Prices in Lithuania rose by about as much as those in Estonia, but average inflation in the euro area remained below 2%. Estonian inflation was higher than that elsewhere in the euro area mainly because of tax rises.

The exchange price of electricity in February was at the same level as a year earlier, while the price of natural gas was down. The total price of energy consumed by households was lower than a year earlier, and prices for motor fuels were around 10% lower.

Prices for services were more than 5% higher than a year before, but inflation for services was down sharply in the first months of the year. It was still around 10% in the closing months of last year, mainly because of the vehicle registration fee introduced at the start of 2025. That fee was classified under services, but it is no longer contributing to inflation this year. The spike in demand meant that package holidays became more expensive in February, and the war in the Middle East will probably boost demand for travel to safer destinations.

Food prices rose further in February, notably for fresh fruit and vegetables as citrus fruit was 35% more expensive than a year earlier, and vegetables about 12% more expensive. One reason for this is that fruit harvests in southern Europe have been smaller in this season than usual. The price of vegetables that are grown year-round in and around Estonia is driven up by energy costs related to cold weather. The price of coffee rose sharply during the month, though the global market price of coffee has been falling since last autumn.

Price pressures will come in the months ahead from the war in the Middle East, as energy supplies from the Persian Gulf have been interrupted, paving the way for oil and gas prices to rise. Petrol stations in Estonia reacted quickly and raised fuel prices at the start of March. Higher energy prices will increase costs for businesses and may push consumer prices overall upwards.

The war in the Middle East may cause inflation to exceed the recent Eesti Pank forecast of 3% for this year. Some 0.7 percentage point of inflation is coming from the rise in VAT last July, which will continue to affect inflation until July this year. The increase in excises at the start of the year is also pushing inflation up, but to a lesser degree. Eesti Pank will publish a new inflation forecast on 31 March.

Further information:
Hanna Jürgenson
Communications Officer of Eesti Pank
5692 0930
Email: [email protected]
Press enquiries: [email protected]