Estonia: Inflation to fall below 5% in H2/2023: central bank

Inflation continues to fall in Estonia, Rasmus Kattai, economist at the Bank of Estonia, said, BNS reports. Kattai said that the drop was mostly due to the fact that prices for energy and most agricultural commodities were coming down. However, he noted that it took time for the effect of the lower prices to pass through to consumer prices. The overall price level of food products was around 25% below the peak of last year, Kattai said. The central bank projects that annual inflation will continue to drop to below 5% in the second half of 2023. However, the rise in VAT will increase the cost of living further and hold inflation at close to 4% in 2024. People’s purchasing power may recover fully in 2025, Kattai estimated.