So, what awaits us next year? Price increases. Consumption taxes, income tax hikes and inflation rates already higher than in neighboring countries will put additional pressure on wages, which in turn will fuel further price hikes.

Retail trade volumes have been declining for so long that soon we'll need to count the quarters of decline on our toes as well as our fingers. Not only are input costs set to rise for both producers and importers due to regulatory changes and increases in raw material prices, but the reduced retail trade volume will also force producers and importers to raise prices further as the cost base for each unit of production grows.

The rising cost of coffee beans and cocoa is no longer news, butter prices have gone up following temporary supply chain issues and some food groups may yet face price increases due to raw material costs.

Retail partners are not having it easy either, with similar concerns. Household finances are unlikely to improve due to tax hikes, as taxes will rise significantly next year.

The Reform Party's old election slogan about making Estonia one of the "five wealthiest countries in Europe" will likely come true next year – if we measure it by the rate of value-added tax (VAT) on food products and their price levels. Only one EU country, Denmark, will have a higher VAT rate on food than Estonia. As a side note, Denmark's GDP per capita, adjusted for purchasing power, is nearly 50 percent higher than Estonia's.

Estonian consumer sentiment toward the current situation is already apparent. According to the Estonian Institute of Economic Research's consumer barometer, fewer and fewer people believe their household's financial situation has improved or stayed the same over the past 12 months.

To illustrate: in June, 12.9 percent of households thought their financial situation had improved and 34.7 percent believed it remained the same. By September, these figures had dropped to 9.9 percent and 32 percent, respectively. In June, 13.2 percent of respondents still believed in a brighter future, but by September, this figure had fallen to 9.9 percent. The percentage of those expecting their financial situation to remain unchanged fell from 37.6 percent in June to just 27.5 percent in September. Over half of respondents now hold a grim view of life in Estonia, believing it will be much worse in 12 months.

Government officials have countered these figures, arguing that the consumer confidence survey should not be considered as it reflects a period before recent positive decisions on the state budget were made.

Looking at the new and increasing taxes coming into effect next year, it seems unlikely they will bolster consumer confidence. It is clear that people's net income will decrease, VAT will rise mid-year and an automotive tax will be introduced. If local governments do not intervene, property taxes may also increase.

Is there anything positive? Certainly, some consumers have reasons for optimism. The Euribor rate has declined, and for some, lower mortgage payments or vehicle leasing costs have freed up disposable income.

Additionally, slightly over 10 percent of working individuals decided to increase their contributions to the second pension pillar from 2 percent of gross salary to 4 or 6 percent. On the other hand, the consumer barometer indicates that 14.1 percent of households are using their savings to cover current expenses and 4.5 percent are living on borrowed money. These figures have also increased since June. At some point, borrowed money will run out and savings will be depleted. What happens then?

Of course, we should commend the government for abandoning the sugar tax and for making regulatory changes that benefit packaging handlers. However, waste management companies have expressed confusion about how officials arrived at some of their calculations.

I'll end on a positive note. A bottle of vodka will indeed become more expensive due to alcohol excise duties, but not as much as initially feared, since plans for additional excise hikes were shelved. Cheers, and happy end-of-year celebrations!

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