Estonia's consumer price index (CPI) grew 3.3% in annual terms in May, data from Statistics Estonia showed on June 7.

The reading shows inflation accelerating by a margin of 0.1pp compared to April. That is out of line with regional inflation forecasts that the commodities-driven surge of CPI around Central and Eastern Europe at the turn of the year will fade. 

Instead, rising prices in the food and transport sectors - fuels in particular - drove a rebound in April and May. The fifth month of the year saw Estonian CPI in positive territory for the tenth consecutive month, after deflation dominated between May 2015 and July 2016. In monthly terms, consumer prices gained 0.2%.

The annual increase in April was primarily driven by rising prices of food and non-alcoholic beverages, which grew 6.1% y/y. A 14.9% rise in the price of diesel and 9.8% expansion for petrol also contributed. Prices in the transport sector grew 4% on the year overall.

Estonian CPI finished last year at just 0.1%, below predictions of 0.5% from the International Monetary Fund and the 0.8% forecast by the European Commission. In line with forecasts that global inflation will return with a bang in 2017, Estonia's CPI is likely to see a serious acceleration 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%, while the European Commission expects price growth of 3.3%.