Inflation was at its lowest level of the past two years in November
Economist at Eesti Pank
Data from Statistics Estonia show that prices were 4% higher in November than a year earlier, but the price level was unchanged from October. Motor fuels were 5% cheaper in November than in October, balancing out a large part of the rise in food prices. Core inflation also continued to come down for both goods and services. Increased uncertainty has made consumers in Estonia more cautious, and households have reduced their spending.
Initial estimates put inflation in the euro area at 2.4% in November, down from 2.9% a month earlier. Inflation was lower in the euro area mainly because energy prices have fallen. The tighter monetary policy of central banks has helped in reining inflation in and reversing the trend. Core inflation still remains above its target level and was 3.6% in November.
Average inflation in Estonia this year is expected to remain close to 9%. Large changes are expected in January as the rate of VAT rises and increases in excises start to apply. Eesti Pank is currently forecasting that inflation next year will be 3.4%.