Estonia Energy Prices Lower, Inflation Forecast 3.8% Peak

inflation Sulev Pert

At current energy prices, inflation will peak at the end of the year

Sulev Pert

Economist at Eesti Pank

Postitatud:

07.04.2026

Data from Statistics Estonia show that consumer prices in March were 3.6% higher than a year earlier, but the same as in February.

Estonia was the only country in the euro area where energy prices were lower in March than in February. Data from Eurostat show that energy was 1.4% cheaper in Estonia, while energy prices in the euro area on average rose by 6.8%. The main reason for this was that the price of electricity fell and offset the rise in prices for fuels. Electricity was very expensive at the start of the year in the Baltic states, but the exchange price dropped by 40% in March. Electricity prices in central Europe were more stable this winter and were lower than those in the Baltic states.

The war in the Middle East drove prices for motor fuels up sharply in March as diesel rose by 27% over the month and petrol by 14%. Global prices of liquid fuels have risen faster than the price of oil since the conflict started at the end of February, primarily because the refining margin for diesel fuel has increased. Production of diesel is now more expensive than in 2025 at around 30 dollars a barrel. Gas has so far risen in price more slowly and was 9% more expensive in March than in February, but it was 13% cheaper than a year earlier. In the energy crisis of 2022 it was gas and electricity that were the main drivers of price rises, but this time it is oil and motor fuels. The rise in energy prices has had a more limited impact this time around.

Prices in global food markets fell at the end of last year and the start of this and the pass-through of this has slowed food price inflation to 4%. Rising energy prices will slowly pass through into food prices though through prices for fertilisers, animal feed and processing. If the oil price remains high, the lag before it passes through means that most of the rise in food prices will come in the closing months of 2026.

Services were the main source of inflation last year as they rose in price by 10%, but inflation for them slowed in the first months of this year to 5% in March. The impact of the motor vehicle tax passed out from service price inflation, and so price rises are now better aligned with pay rises. Higher energy prices may push prices for transport up in the months ahead though.

The Eesti Pank forecast expects that consumer prices will rise by 3.8% this year, The current level of energy prices and market expectations for them mean that inflation will peak at the end of the year.

Additional information:
Hanna Jürgenson
Communications officer
Eesti Pank
Tel 5692 0930
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