The consumer basket in Estonia was 2.5% more expensive in June than it was a summer earlier, and 0.4% more than in the previous month. Inflation was still at 5% in January this year, however, it has since reportedly fallen consistently from month to month, mainly because energy prices have fallen. Inflation was at its lowest level of the past three years in June.

The majority of the consumer basket is more expensive than it was a year ago, and services are the main cost type that has raised the basket’s price. Prices have risen fastest for transport, medical services, and package holidays, and also for various beauty services. Growth in wage costs has been the main driver of the increase in services prices, as wages have continued to rise quite fast.

Data reported by Eesti Pank showed that the growth in wages has held at 7–8% in recent months, while inflation has fallen below 3%. This means wages are reportedly rising at a faster rate than inflation, and the purchasing power of consumers will improve further. Surveys for the Estonian Institute of Economic Research show that expectations for future inflation have equally fallen, and people assess their future financial position as better than they did before.

Eesti Pank forecasts that inflation this year will average around 4% in Estonia. However, the price level is expected to rise in the second half of the year as energy prices will climb for seasonal reasons and higher prices for food commodities will gradually pass through into retail prices for food. In addition, inflation in the coming years will be affected by new tax policy decisions taken to cover the increased spending by the state and to reduce the budget deficit.

Policy effectiveness will therefore be measured only by purchasing power and productivity results.