Yearly growth in consumer prices slowed to 3.9% in March. A large part of the rise in prices was caused by the increase in VAT and excises at the start of the year. Without the effect of the rise in taxes, inflation in March would have been 2.4%. The consumer basket was 0.4% more expensive than in February. Most of the rise over the month at 0.3 percentage point came from communications services, which were up in price by 7.6%.

Data from the Estonian Institute of Economic Research show some signs of optimism in estimates by companies. This gives grounds to hope that the largest part of the fall in production has already happened. Production capacity at manufacturing companies is still largely underutilised and there are still substantial stocks in warehouses. This means that downward pressure on manufactured goods and food prices remains.

The general uncertainty means that people are being cautious about consuming and borrowing. Wages have continued to rise relatively fast in recent months, and data from the Tax and Customs Board show wage growth of around 8% in February. The minimum wage rose at the start of the year and pensions will increase in April. That is also the time when some companies are planning larger price increases.

Monthly inflation in March was in line with the Eesti Pank forecast that expects inflation to average 3.2% over the year in 2024. Inflation should fall to close to 2.5% in April, as the energy subsidies that were ended a year earlier pass out from the reference base. The further development of consumer prices will be strongly affected by the prices of oil and electricity. The price of oil has started to rise again, causing prices for motor fuels to increase. The market price of electricity is currently notably lower than in recent years, though it is very volatile and depends a great deal on the weather.

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