The slowdown in the rate of inflation seen in June did not continue into July, Bank of Estonia (Eesti Pank) economist Rasmus Kattai noted.

Kattai puts inflation at least in stores and with services such as telecoms down to consumer-driven demand from more affluent households.

In July, the primary driver of inflation came in the telecommunications sector, which saw a more than 10 percent increase over the year.

Estonia's main telecom providers, Telia, Tele 2, and Elisa, declined on Wednesday to provide comment on the matter to "Aktuaalne kaamera".

Economic analyst and LHV Pank Heido Vitsur did provide comment and said he attributes the rise in service costs to limited competition.

"I have always known that we have telecommunications services which compared with our neighbors are significantly costlier so why they need to become even more expensive, I truly cannot understand," he said.

The rate of inflation for various goods and services was somewhat surprising, "Aktuaalne kaamera" (AK) reported, and cannot be fully justified by a rise in company overheads and other costs.

Eesti Pank economist Rasmus Kattai told AK: "Travel services, beauty services, entertainment, dining out and rental prices have risen at a faster rate than the costs would justify. It is quite clear that purchasing power does not derive equally from all societal groups; wealthier households are likely driving this price growth," he noted.

Kaimo Niitaru, product selection and procurement director at supermarket Prisma, said this year's price rise has been rather modest by comparison, and mainly derives from the VAT hike imposed at the start of this year (with another to come at the start of next year – ed.).

Despite this, consumers remain cautious and seek out discounts, especially for manufactured goods, as the start of the new academic year looms.

Niitaru said: "Purchases of school supplies are being postponed closer to the start of the school year."

"While in previous years, the sales volumes of school supplies were significant as early as the end of July and the beginning of August; now we can see that these purchasing decisions are being held of to as late as possible," he told AK.

Prices in the coming years will largely depend on governmental tax increases.

"It can be estimated that the forecast slowdown in inflation next year will not occur to the extent previously expected, and the price rise next year will likely be in the same range as this year, ie. slightly below four percent," Kattai said.

According to Kattai, the government's tax hikes and cost-saving measures will likely further reduce consumer confidence.

This, in turn, could lead to fewer purchases, and eventually halt the continued rise in prices.

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