Estonia's Ministry of Finance published an assessment projecting further inflation increases in the final months of 2026 as higher energy costs feed into consumer prices. Inflation for the year is expected to exceed the 3.2% projected in its summer economic forecast. Statistics Estonia data showed annual inflation accelerated to 4.2% in October, with prices rising 0.6% from September. Energy prices were 18% higher than a year earlier. Supply risks linked to the Persian Gulf conflict and uncertainty around energy infrastructure pushed average oil and gas prices to their highest levels of the year in October. Low gas storage levels added pressure ahead of winter, and higher European gas prices are expected to reach Estonian retail prices in the coming months. Electricity exchange prices slightly below those a year earlier have cushioned inflation, but limited generation capacity is expected to partly erode that advantage in November. Rising district heating and electricity prices will add to inflation toward the end of the year. Price pressures outside energy remained more subdued. Food prices stopped falling after four consecutive months of declines and were 0.7% higher than a year earlier, mainly because of more expensive garden produce. Core inflation, covering services and industrial goods, remained low at 1.8%, partly reflecting declines in some leisure service prices.
Estonia's Ministry of Finance expects 2026 inflation to exceed 3.2% forecast as energy costs rise
Estonia's Ministry of Finance expects energy costs to drive further inflation increases in the final months of 2026, taking inflation for the year above its summer forecast of 3.2%. Annual inflation reached 4.2% in October, with energy prices up 18% from a year earlier. Higher gas costs are expected to reach retail prices in the coming months, while core inflation remained low at 1.8%.