Data from Statistics Estonia shows one of the most significant inflation drivers was telecommunications (10.5 percent on-year) and services (7.1 percent on-year). Healthcare, alcohol and tobacco products rose by 8 percent.

However, the rapid price increase for food has ended, with prices rising by 1 percent on-year. Several key items fell in price, for example, vegetables by 26 percent, sugar by 15 percent, and fresh fish by 12 percent. In contrast, olive oil became 29 percent more expensive, and juices and syrups 24 percent more expensive.

While inflation is slowing, March's figures were still too high, Luminor Bank Economist Lenno Uusküla said.

"Obviously, this is not very encouraging, given that the expected inflation rate for the Euro area as a whole is 2 percent. We are exceeding that by quite a wide margin, by a factor of two," he told Fridays' "Aktuaalne kaamera."

"The 4 percent a year is more justified because the energy support measures ended in April last year and VAT is now being applied. But if you look at the March figure – 0.4 percent – this year as a whole would give an inflation rate of even more than 4 percent, if it continued like this from month to month. That is a very high inflation rate right now," he said.

--

Follow ERR News on Facebook and Twitter and never miss an update!