"Over the past four months, with small fluctuations, the trend in trade and exports has been downward," Vitsur said. "That is already more troubling than the slight drop seen in February. Estonia is losing competitiveness and markets, and this has been going on for quite a while."

According to Statistics Estonia, exports of goods fell by 1% in February this year compared with the same month of the previous year, while imports increased by 6%. Estonian trade deficit in February was 426 million euros, which is 132 million euros more than in the same month of the previous year.

Vitsur acknowledged that because Estonia is an expensive country, its economic competitiveness in Europe and globally will decline if it cannot become highly innovative. This, in turn, means the nation's growth rate will remain weak.

The International Monetary Fund already analyzed the situation the summer before last and found that since the 2009 financial crisis, Estonia has been losing markets compared to its competitor countries.

"So there is something very worrying about our competitiveness," Vitsur noted.

According to recently published industrial production statistics, food production in Estonia has declined and demand for food products has decreased.

"Over the past five years the country has reached a price level above the European average, and our food prices are among the highest in the European Union," Vitsur explained. "At the same time, our incomes are about twice as low as in those countries where prices are similarly high. So this is a serious socio-economic problem."

In his view, delaying measures to ease price increases in Estonia could prove costly. Although Vitsur is skeptical about Lithuania's decision to allow people to travel by train for free for two months, he said it could reduce demand for fuel.

Vitsur also pointed out that this year food is more expensive in Estonia than even in Sweden, as Sweden reduced its value-added tax from 12 percent to 6 percent, which was reflected in prices. Therefore, the government has an opportunity to influence the price situation to some extent. At the same time, he believes the government is right in saying that lowering the tax on food does not automatically translate into lower prices across the board.

"If we do not have solid agreements and control mechanisms that allow us to determine who is violating them, then there will be little benefit," Vitsur added.

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