Data from Statistics Estonia show that the consumer price index was 0.3% higher in July than in June, and 3.4% higher than a year earlier. Food and manufactured goods were up 2% in price over the year, while services were up by 7.6%. Overall inflation in July was only held down by energy, which fell in price by 0.3%.

Like in previous months, it was mainly services that drove inflation in July. The rise of 4% in rent prices had a major impact in July, as rents started to increase from their recent low levels. The largest rise in administered prices was of 20% in the price of water and sewage services, while the increase in state fees also had some impact. Inflation was high in the private sector for accommodation services and package holidays as July is the tourist season.

Inflation for goods has held at around 2% in recent months as retail sales volumes continue to fall, making it hard to raise prices. Prices of clothing and footwear fell over the year in July for the first time since 2021. The price level of clothes has fallen by a record 10% in two months. Part of the fall has come from seasonal discounts, and part from shops reducing their markups. Clothes and footwear are more expensive in Estonia than the average for the euro area, partly because the climate is colder and so the range of products is different.

The price level of energy has fluctuated sharply in recent months. The oil price fell below 80 dollars a barrel by the end of July, and lower prices for motor fuels may be expected to show up in the consumer price statistics for August. Electricity as a universal service was ended in July, but this had little impact on the price statistics. The exchange price for electricity has risen in the Baltic states in recent months, and it has approached 100 euros per megawatt hour. Electricity costs only around 20 euros per megawatt hour in Finland and Sweden, but the interruption to the Estlink 2 cable means that the cheap electricity does not reach consumers in Estonia.

Eesti Pank forecasts that the consumer basket will rise in price by an average of 3.8% in 2024.

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