The bank says that despite the lower CPI figure posted for September, inflation may be higher in the coming months, in part because compensation for energy prices, including electricity as a universal service, began in October last year, and so will now pass out from the scope of the calculation of inflation.

The central bank says trends for prices in September suggest that stores have likely not yet raised prices, in anticipation of the 2-percentage-point rise in VAT which was a part of the Reform-Eesti 200-SDE coalition agreement signed in April.

The deterioration in the economy and falling retail sales have made it harder for them to raise prices, the Bank of Estonia adds.

The rise in price which will be sparked by tax changes from the new year may start to be reflected in higher prices for durables, and also in prices in sectors where competition is weaker, the bank says.

As reported by ERR news, September's CPI was at the lowest for over two years, at 4.2 percent, according to Statistics Estonia.

Food prices remained high, however, 9 percent more than a year earlier, while energy prices were nearly 10 percent down on September 2022.

Core inflation, which covers manufactured goods, plus services, stood at 6.4 percent.

There was little substantive change in price levels between August and September this year.

Of food sectors which did see a fall, rather than a rise as in most cases, in price, vegetables and dairy were the most notable, the central bank says, adding that accommodation rentals also fell on year to September.

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