Central Bank of Estonia reports March inflation at 3.6% as falling electricity prices offset fuel-driven energy pressures

The Central Bank of Estonia published an inflation update based on Statistics Estonia and Eurostat data, showing consumer prices in March were 3.6% higher than a year earlier and unchanged from February. The release highlights that Estonia was the only euro area country where energy prices fell month on month, as a drop in electricity prices offset rising motor fuel costs. Energy was 1.4% cheaper in Estonia in March than in February, compared with a 6.8% average rise in the euro area. The electricity exchange price in the Baltic states dropped by 40% in March after a very expensive start to the year, while the war in the Middle East pushed motor fuel prices up sharply, with diesel up 27% over the month and petrol up 14%; the update links this to faster rises in liquid fuel prices than in oil due to higher refining margins for diesel and notes diesel production costs around USD 30 per barrel above 2025 levels. Gas rose 9% on the month but was 13% cheaper than a year earlier. Food price inflation slowed to 4% as earlier declines in global food markets fed through, though higher energy prices are expected to pass into food costs gradually, with most of any oil-driven increase potentially coming in the closing months of 2026 if oil prices remain high; services inflation slowed to 5% in March after 10% last year as the motor vehicle tax effect dropped out, though transport prices may rise in coming months if energy costs stay elevated. The Central Bank of Estonia forecast expects consumer prices to rise by 3.8% this year, with inflation peaking at the end of the year given current energy prices and market expectations.