In February, the consumer price index remained at the same level compared to January, but rose by 4.2 percent compared to February of the previous year.

In January, Estonia's annual inflation rate was 4.7 percent. With this indicator, Estonia ranked second in the European Union.

Economist: Tax hikes the main drivers of price advance

Tõnu Mertsina, chief economist for Swedbank, told ERR that recent VAT and excise duty hikes have been the main drivers of price advances in the past year. Energy prices contributed too, he added.

Mertsina forecasts price increases to slow on year in April and May. "Today, looking at March data, while it may be too soon to say, the effects of tax hikes are becoming less in terms of traders adding the new VAT rate to prices of goods and services."

Mertsina said that the price level should come down further in May when Estonia's universal electricity service, introduced to mitigate high energy prices during the global energy crisis, is set to expire.

That said, rising world market oil prices might contribute to price advances, the analyst said, admitting that Ukraine hitting Russian refineries might have a hand in this. "The price of oil has been inching upward this year, which has reflected in motor fuel prices also in Estonia," Mertsina noted.

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