Between October and November this year, the HICP fell by 0.5 percent, in the aftermath of October's half-term school break.

"According to the preliminary estimate, the November index decline was influenced by cheaper holiday travel, air tickets and hotel accommodation," Statistics Estonia's Lauri Veski said.

Economist: Inflation pace fell after summer VAT hike

Chief economist Lenno Uusküla of Luminor Bank said the pace of inflation had significantly slowed in the aftermath of summer's price spikes, which followed the two percentage-point VAT hike. "The strong euro, low fuel and import prices are reaching consumers bit by bit. This also keeps costs to Estonia's companies low. At the same time, the strong euro exchange rate against the dollar is hindering exports and in turn reducing demand and price pressure," Uusküla said.

Annual inflation is also still being buoyed by the rise in food prices, Uusküla noted.

"Also in December and at the start of the new year, a small price rise, or even a price fall, is expected, as import prices are falling," Uusküla added.

Service prices in Estonia will remain on an upward trend for some time, because the purchasing power of wages remains weak even as wage inflation is taking place, Uusküla said.

The HICP takes into account expenditures made by tourists and is comparable to the international index, whereas the consumer price index (CPI) only uses the consumption structure of Estonia's residents in Estonia as its weights and measures.

Statistics Estonia is due to publish its CPI figures for November by this Friday, December 5.

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