Data from Statistics Estonia indicates that prices in Estonia were 0.4 percent lower in October than in September. The overall level of prices has remained essentially unchanged for the past half a year, however annual inflation still rose to 4.9 percent last month due to the compensation for energy prices that was introduced last October, according to a press release.

Consumer prices were down last month thanks to seasonal factors, though – which during fall months are the usual reduction in food and tourism services prices. Lower prices for fruit and vegetables as well as for dairy products resulted in 1.1 percent cheaper consumer shopping baskets than in September.

Further falls in consumer prices for food, meanwhile, may be contained as the prices of some food commodities on global markets have already started to recover by now.

Falling energy prices, especially those of electricity and gas, have been one of the main drivers of the reduction in inflation this year, Pert noted. The market price of electricity, which exceeded €174 per megawatt-hour (MWh) last year, fell to €87 per MWh last month. The price of natural gas has climbed since summer, however, and thus the price of gas-fueled heating will likely increase in the coming months.

The Bank of Estonia estimates that inflation will be in the range of 4-5 percent in the final months of 2023, and ultimately average 9.4 percent for 2023.

Price increases sparked by tax changes from the new year may start to be reflected in store prices in the months ahead already, the economist noted, unless the economic downturn in Estonia pushes merchants to change their pricing policies.

The central bank forecasts that inflation will come down next year to 3.4 percent.

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