The Consumer Price Index (CPI) rose by 9.2 percent for 2023 as a whole, compared with the preceding year, state agency Statistics Estonia reports.
Price changes relating to food and non-alcoholic beverages exerted the biggest impact on the CPI in 2023, Viktoria Trasanov, team lead at Statistics Estonia, says.
Trasanov said: "Among food products, the largest rise was seen in the prices of sugar (up 42.2 percent on year to 2023), cocoa (which rose by 29.9 percent on year), olive oil (up 26.6 percent) and sauces (25.6 percent)."
On the other hand, "Gasoline was 7.4 percent cheaper; diesel fuel 10.7 percent cheaper," in 2023 compared with the preceding year, Trasanov added.
As noted, Trasanov summarized that the greatest impact on CPI derived from inflation food and non-alcoholic beverages, which accounted for almost two fifths of the total rise in CPI.
Between November and December 2023, CPI fell by 0.1 percent, while December's figure was 4.0 percent higher than that for December 2022.
Goods were 2.5 percent more expensive, services 6.7 percent costlier, in December 2023, compared with December 2022.
Between November and December this year, the CPI was influenced the most by a 24 percent rise in prices for natural gas, on the one hand, and by the 4.1 percent fall in the price of motor fuel, on the other.
Viktoria Trasanov noted that, compared with December 2022, the CPI had been impacted upon the most by price changes relating to housing and to food and non-alcoholic beverages, which each contributed over a fifth of the total increase
Among food products, the largest rise was registered in the prices of olive oil (56.8 percent).
Canned milk was 18.6 percent costlier in December 2023 than in December 2023; confectionery became 17.8 percent more expensive over the same time-frame.
Cocoa was 25.1 percent cheaper in December 2023 compared with the same month in 2022.
Gasoline was 6.4 percent, diesel fuel 12.3 percent cheaper, in December 2023, compared with December 2022.
Statistics Estonia amassed the above information on behalf of the Ministry of Finance.
Economist: Stores started marking up prices ahead of VAT hike coming into being
Chief economist at Luminor Bank Lenno Uusküla, commenting on the above, noted that in the second half of last year, prices in store had already shaped by the anticipated VAT hike.
The two percentage-point hike, to a rate of 22 percent, was unveiled by the Reform-Eesti 200-SDE coalition in April.
Uusküla said: "Likely for this reason, our inflation in the second half of last year has been higher than experienced in Latvia and Lithuania."
On the other hand, this means a lower rise in the early months of 2024.
"In the first months of this year, a small price increase is still expected due to the continued gradual addition of VAT to prices, while free county transport also disappeared from the first of January," Uusküla said.
On the other hand, the ongoing recession has exerted a downward pressure on prices, because purchasing power remains low and real incomes are much lower than expected, Uusküla said.
"Consumer confidence in making more wide-ranging plans continues to be weak, because the labor market situation is uncertain, and there are many changes in the environment going on," he added.
As for those changes: "Looking at the CPI, over the past three months, housing-related expenses have risen the most, by 2.1 percent, while the prices of various goods and services have risen by 1.7 percent. This is followed by the cost of dining out, which rose by 0.8 percent in price; in health care, whose prices increased by 0.7 percent, in household expenses, whose prices rose by 0.6 percent. The continued rise in the price of various services is to be expected, given inflation with goods significantly exceeded the inflation in services, more so than before."
The fall in commodity prices has been minimal, on the other hand, despite the much lower price level of raw materials.
Uusküla said that: "Food prices, which fell in the meantime, have started on an upward trajectory once again and increased in price by 0.5 percent over the three months."
In recent months, the costs of transport have fallen the most, at 3.7 percent, due to falling fuel prices; communication services became 1.3 percent cheaper, while clothing and footwear became cheaper by at least 0.2 percent.
Editor's note: This piece was updated to include comment from Lenno Uusküla.
Editor: Andrew Whyte