The Consumer Price Index (CPI) in Estonia rose by 5 percent through the course of 2023, state agency Statistics Estonia reports.
The month-on-month figure for December 2023 to January 2024 meanwhile was 1.3 percent.
The above data is a flash estimate, while Statistics Estonia is due to publish more comprehensive and definitive CPI information next Wednesday, February 7.
The confirmed annual CPI rise in December 2023 stood at 4.3 percent.
Lenno Uusküla, chief economist at Luminor Bank, said that excluding seasonal fluctuations like the January sales, the monthly CPI rise was more like 1.4 percent, a level he called "surprising."
"The [two percentage point] VAT hike [which came into effect at the start of the year] could have resulted in a maximum CPI rise of 1.66 percent [on month], yet we are also speaking hypothetically here, as some types of goods and services are not subject to VAT," Uusküla said.
"Moreover the free county public transport disappeared from January," he added, referring to free intra-county bus transport in most of Estonia's regions (the free public transport scheme in Tallinn remains intact).
The concomitant rise in public transport prices, ie. local residents having to pay for tickets again – the free scheme having been in place for around five years – would have exerted an upward pressure on CPI, Uusküla said.
"However, its effect on the general CPI should also be limited," he went on.
"Firms did not raise the prices of their goods and services in connection with the VAT change in January, and retained their customers," he added (conversely, some prices were hiked towards the end of 2023 in anticipation of the VAT rise – ed.).
"At present, without disclosing the prices relating to different commodity groups, it is difficult to assess what exactly was behind the CPI rise. The last time a leap in the cost of living of that scale occurred inside of one month was in April of last year, when the energy support measures ceased," Uusküla went on. These support measures ended with the end of winter.
"Prior to that, in the summer of 2022, when the prices of energy and other commodities were reached record highs," was another comparable month so far as CPI rises went.
While harmonized CPI in Estonia had gone up by 0.6 percent in the last six months up to December, the CPI has already been 2.4 percent in the six months to January this year.
Part of this seems to relate to a wage-price spiral, though going forward, CPI may fall.
Uusküla said that: "The general wage increase has been higher than the CPI, meaning purchasing power is improving, a little. Considering the weak state of Estonia's economy at present: The low consumption, production and export, there should be room for prices to continue to fall."
An explanation of the difference between comparing inflation rates between months and on year, but for the same month in the two years, is here.
Editor: Andrew Whyte