Finland’s Inflation Rises, But Prices for Some Items Decrease

In Finland, consumer prices saw an increase of 0.6 percent in June compared to the same month last year, according to Statistics Finland. Despite this increase, food and non-alcoholic beverages became cheaper by 0.4 percent, while housing, water, electricity, gas, and fuels decreased by 0.9 percent. Alcoholic beverages and tobacco prices rose by 4.3 percent, and clothing and footwear prices increased by 3.4 percent. Education saw the highest price increase of 7.9 percent.

The harmonized consumer price index does not include certain items such as owner-occupied housing, gambling or loan interest. Roope Ohlsbom, a business economist, noted that Finland’s low inflation has boosted consumer confidence but believes that the European Central Bank’s (ECB) interest rates are still too high for Finland, resulting in inflation falling below the ECB’s target of two percent.

In the euro area, consumer prices increased by 2.5 percent year-on-year in June. Finland had the slowest inflation rate in the euro area at 0.6 percent despite core inflation remaining at 2.9 percent and contributing significantly to annual inflation. Jari Hännikäinen, a senior market economist highlighted that the rise in prices in June was primarily driven by services with service prices increasing by 4.1 percent annually.

The ECB started lowering key interest rates in June but its monetary policy outlook remains cautious due to concerns about core inflation which excludes volatile items like food and energy playing a crucial role in policy decisions as they closely monitor price pressures and may cut interest rates further based on inflation data before December if necessary depending on how low it is expected to go down to zero or even negative territory . Market analysts expect this move as they expect another interest rate cut by December depending on how low it will be during this period .