Estonia's consumer price index (CPI) grew 3.4% in annual terms in February, data from Statistics Estonia showed on March 7.
The reading adds as many as 0.7pp to the strong growth recorded in January, putting CPI at its highest since July 2013. As in many other economies in the region, the gain is being driven by fast-expanding prices of motor fuel and food.
February saw CPI in positive territory for a seventh consecutive month, after deflation dominated between May 2015 and July 2016. In monthly terms, consumer prices gained 1.3%, largely due to growing prices of alcohol and tobacco, as well as clothing and footwear.
The annual increase in January was primarily driven by rising prices of motor fuels, Statistics Estonia notes. Prices in transport rose 8.9% y/y overall, while within the segment, petrol prices increased 22.7% y/y and diesel fuel became 25.8% more expensive. Food prices grew 4.1% overall.
Estonian CPI finished last year at just 0.1%, below predictions of 0.5% from the International Monetary Fund or the 0.8% forecast by the European Commission.
In line with forecasts that global inflation will return with a bang in 2017, Estonian's are likely to see a serious acceleration in prices this year. The pace is set to be even higher than the average for the Eurozone, suggests Eesti Pank, primarily because of rises in excise duties. The central bank plots average inflation for 2017 at 2.8%, the same as the European Commission.