Consumer price inflation has come down steadily throughout this year. Inflation was still close to 20% at the start of the year, but by August it had fallen to 4.6%. Movements in prices were very different in different sectors in August though. Energy prices were 14% lower than a year earlier, while food prices were 12% higher and prices for services and manufactured goods were up 7%.

Overall price pressures have eased but have not disappeared. The price level in Estonia rose by 4.7% in the first eight months of the year, and one third of that rise came in April, when support for energy prices ended. New price pressures have mainly been caused this year by services, as rising services prices have been pushed by rapid wage growth being transferred to prices. Prices for tourism services started rising strongly last summer as demand for tourism services started to increase sharply following the recovery from the pandemic. Consumption of travel and leisure services is now growing more slowly.

Price rises have slowed for durable goods among manufactured goods. Demand factors like the expectation of future price growth, the spending of savings, and activity in the real estate market earlier supported rising prices for durables, but they have by now dissipated and consumer confidence is low. Consumer surveys for August report that no increases in purchases of durable goods are planned. Lower prices for inputs and an appreciation of the euro have helped bring inflation down on the production side. Domestic electronics goods have also become cheaper in consequence.

Overall inflation will probably remain around 4-5% until the end of the year. Oil prices have started to rise on global markets, and the reference base from a year ago will start to cool inflation from September. Eesti Pank forecasts that inflation will average close to 9% in 2023.

Additional information:
Viljar Rääsk
Head of Communications
Eesti Pank
6680 745, 5275 055
Press enquiries: [email protected]