Inflation slowed to 23.7% over the year in September. This is mainly because there was a fall in electricity prices, which have been very volatile in recent months. The price of electricity in the Baltic states reached record highs in August, but in September it dropped sharply. It was down 16% for consumers over the month, and that reduced inflation in September by 2.2 percentage points.

Leaving electricity aside, the statistics still show that the prices of other goods have risen very rapidly. Prices for food continue to rise fast in Estonia and elsewhere in Europe, though food commodities have in recent months become notably cheaper on global markets. Changes in prices on the global market arrive in the European Union market after a long lag.

Prices have risen for manufactured goods because of ongoing problems in international supply chains, the depreciation of the euro, and the strong demand that continues to be kept up by the savings built up during the pandemic. Savings have started to decline in recent months though and the demand-side price pressures are easing.

Overall inflation will be reduced a little from October by the steps taken by the government to regulate energy prices. The Governing Council of the European Central Bank has raised interest rates but inflation cannot be brought under control through monetary policy alone. The government’s fiscal policy has an equally important role to play in reducing price pressures. Estonia’s current large budget deficit will deepen though, and so will boost inflation further.

See also the FAQ about inflation on the Eesti Pank website, where answers are given to common questions about inflation.

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