Estonia's economy has declined for 10 quarters in a row. Raudsepp said this could become the longest recession in the country's history.

"The longest period of recession we have had was during the financial crash [2008]. Then it was 11 quarters as I recall, so we'll probably beat that record this year," he told "Vikerhommik" on Thursday.

Prices are also likely to rise in parallel, but rapid hikes that started in 2022 can no longer be seen. Raudsepp said the increases can now be classed as normal.

He pointed out that the increase in production prices and various enacted and planned tax increases are the causes. "A couple of years ago, we could not, or perhaps did not even try to, contain the rapid rise in input prices for manufacturing. This led to very rapid price increases," he outlined.

Raudsepp said Estonia is at the forefront of Europe in terms of food price growth.

"If the average price level in the European Union is 100, we are already 109 percent of that," the economist said. "We are practically in the same price bracket as Finland and we are more expensive than Sweden. We are among the top 10 in the European Union today with food prices."

In terms of the price of clothes and textiles, Estonia is among the five most expensive countries in Europe.

"There, compared to the European Union average, we are somewhere around 117 percent," Raudsepp said.

Compared to the beginning of the year, the food basket observed by the Institute of Economic Studies has become more expensive by 1.6 percent, compared to last year by 0.2 percent.

According to Raudsepp, it is normal for the food basket to increase in price by a few percent per year. 

Compared to March, vegetables have risen in price the most, while fish have had the biggest price drop. "Fish prices in Estonia rose at half the rate of other European countries in the previous period. We can say that if the price is now falling, this is normal and to be expected," said Raudsepp.

Due to the price increase, customers may also buy less and food package sizes have become smaller. But this is also related to long-term trends.

"Our households have become smaller, our consumption habits have changed, we want more variety. In a family of three, for example, each member of the family may prefer a different bread, and smaller packaging gives them the opportunity to do so," Raudsepp told the show.

Although, according to Raudsepp, consumers also monitor the price per kilo and liter of products, this may not always be the deciding factor. "When people are price sensitive, they do not want to make that one-off purchase very big, which means that buying cheap by the liter or kilo is often an investment," he said.

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