The latest Statistics Estonia data, published Thursday, indicates that prices were 4 percent higher in November than a year earlier, however price levels were unchanged from October. Motor fuels were 5 percent cheaper in November than in October, balancing out a large part of the rise in food prices, according to a press release.

While core inflation also continued to come down for both goods and services, "Increased uncertainty has made consumers in Estonia more cautious, and households have reduced their spending," Pert highlighted.

Initial estimates put inflation in the euro area at 2.4 percent in November, down from 2.9 percent on month. Inflation was lower in the euro area chiefly due to falling energy prices. "The tighter monetary policy of central banks has helped in reining in inflation and reversing the trend," he added.

Core inflation in the euro area likewise still remains above its target level, standing at 3.6 percent in November.

"Large changes are expected in January as the VAT rate rises [from 20 to 22 percent] and increases in excises start to apply," the economist noted, adding that the country's central bank is currently forecasting that inflation next year will be 3.4 percent.

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