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Estonia Inflation July 2023

Estonia: Harmonized inflation falls to near two-year low in July

Harmonized inflation eased to 6.2% in July, following June’s 9.0%. July’s figure marked the lowest inflation rate since August 2021. Looking at the details of the release, food and recreation inflation moderated further, and housing and utilities prices dropped in July compared to the previous month. In contrast, price pressures for transportation fell at a softer pace.

In addition, the trend pointed down, with annual average harmonized inflation coming in at 16.5% in July (June: 18.0%). Meanwhile, consumer price inflation fell to 6.4% in July, from the previous month’s 9.2%.

Lastly, harmonized consumer prices fell 0.49% in July over the previous month, swinging from the 0.82% increase logged in June. July’s result marked the weakest reading since October 2022.

Going forward, inflation should continue to decelerate through Q4 2023. Muted economic activity, tighter monetary policy at the EU level and lower external price pressures will support the disinflationary trend this year. That said, spillover effects from the war in Ukraine on commodity prices and energy-price spikes this winter pose upside risks.

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