Estonia’s annual inflation rate slowed to 1.5% in August 2026, its lowest level since March 2021 and a marked decline from 2.2% in July. For the first time in more than five years, inflation fell below the European Central Bank’s medium-term target of 2%.
The main downward pressure came from a deeper fall in food and non-alcoholic beverage prices (-2.6% vs -1.6% in July), reflecting lower costs for fruit and nuts, milk, dairy products, and eggs. Prices also declined further for clothing and footwear (-4.6% vs -3.1%), household goods (-0.8% vs +0.1%), and recreation and culture (-3.4% vs -2.6%). In addition, housing inflation eased notably, slowing to 5.5% from 8.3%.
By contrast, transport costs rose at a faster pace (7.2% vs 5.4%), driven by higher prices for gasoline (+7.9%) and diesel fuel (+27.9%). Inflation also picked up in health (3.1% vs 2.7%) and in restaurants and hotels (2% vs 1.3%).
On a monthly basis, consumer prices increased by 0.4% in August, following a 0.5% rise in the previous month.
