Prices rose between 0.9 percent between July and August this year, according to Statistics Estonia's flash estimate of the harmonized index of consumer prices.

Lauri Veski, head of consumer prices at Statistics Estonia, said based on the preliminary estimate prices rose in August in nearly all major sectors. "The only ones to fall were prices in catering and accommodation – this due specifically to accommodation services," Veski said.

The harmonized index takes into account the expenditures made by tourists, compared with the consumer price index (CPI) which uses as weights the consumption structure of Estonian residents in Estonia.

Statistics Estonia is to publish the August CPI data this Friday. The full harmonized index of consumer prices August data will be published on September 16, the agency said.

Economists: Risk that this year of price growth outstripping wage growth

Chief economist at Bigbank Raul Eamets said that both the monthly and yearly flash estimate figures are high, and are likely to outstrip growth in wages.

"As the corrected wage statistics showed, wages grew by 5.9 percent," he noted. "The risk is that this year prices will grow faster than wages, meaning the real purchasing power of people's incomes will decrease. Surely this is quite painful for social groups with lower income."

Chief economist at Luminor bank Lenno Uusküla said the relatively high rate is influenced by the 2 percentage-point rise in the VAT rate which came into effect at the start of July.

"In July prices rose by only 0.5 percent despite the 2 percentage point increase in VAT. Although for some goods and services prices were hiked immediately, in other cases it was observed that the raising of prices was delayed, and somewhat spread out over a longer period. Behind a high price increase like that there are, as expected, also other temporary factors which have influenced our price dynamics from month to month," Uusküla added.

Inflation and a lack of economic growth continue to be the number one issues in Estonia, he added, with growth being held back by inflation.

The average wage rise of slightly under 6 percent as announced by Statistics Estonia this week and which higher income taxes compared with last year are due on in any case, are insufficient to cover price rises, leaving less money for consumption and saving, Uusküla added.

Inflation also serves to raise exporters' costs and reduces the competitiveness of Estonian goods and services, he added.

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