The Central Bank of Estonia’s assessment of October inflation attributes about two-thirds of the 4.2% annual increase in consumer prices to higher energy prices, particularly motor fuels. Core inflation, excluding volatile food and energy prices, remained at 1.8%. This indicates that external factors are driving price pressures, while merchants face greater difficulty passing higher prices on to customers. Diesel prices have risen more than petrol prices as supplies from Gulf states have fallen sharply since war broke out in spring. A further increase in diesel refining margins at the start of November points to continuing shortages. Consumer electricity prices rose 4% despite a slightly lower exchange price than a year earlier, reflecting frequency reserve and security of supply charges and higher network fees. Outside energy, fresh vegetable prices increased around 30% following poor harvests in major European producing countries. Estonia imports about 60% of the vegetables it consumes, while meat and dairy prices fell again in October. Higher energy prices could push inflation up in the coming months. Low reservoir levels in Norway and Sweden could restrict cheap hydroelectricity exports, while expensive natural gas raises electricity prices when wind generation is low. The bank’s September forecast put annual inflation at 3.1%, with a new forecast due in December.
Central Bank of Estonia attributes two-thirds of October inflation of 4.2% to energy prices
The Central Bank of Estonia attributed about two-thirds of October’s 4.2% annual inflation to rising energy prices, especially motor fuels. Core inflation held at 1.8%, indicating that external factors remain the main source of price pressure. Further energy price increases could lift inflation in the coming months, with an updated forecast due in December.