Data from Statistics Estonia show that the yearly growth in the consumer price index did not change in December and remained at 4%. Inflation averaged 9.2% in 2023, which was in line with the forecasts made last year by Eesti Pank. Prices for energy and food being somewhat lower has pulled average inflation in the euro area countries down sharply in recent months, and it was 2.9% in December.

Eesti Pank forecasts that consumer prices will rise by 3.4% in 2024. The price level will be lifted at the start of the year by various tax rises. The impact of rises in VAT and excises will be lessened by the price of natural gas falling in January and by seasonal sales of manufactured goods. Higher electricity prices could be a driver of inflation in January if the weather remains cold. The ending of electricity as a universal service will make electricity prices more volatile for domestic consumers this year, and so make the total consumer price index harder to forecast. The future development of prices for oil and gas will depend greatly on the performance of the global economy.

Core inflation without volatile energy and food prices will continue to fall this year through both goods and services. The price level in Estonia stabilised in the second half of last year, but there has been no major fall in prices. The recession will probably cause some companies to cut their prices this year and reduce their production costs. There is also space in some sectors for prices to be lowered at the expense of profit margins.

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