Fuel prices at a Neste service station in Vantaa on Friday, 17 February 2023. Diesel prices were one of the primary drivers of inflation in January 2023, according to Statistics Finland. (Markku Ulander – Lehtikuva)


THE SURGE in Finnish consumer prices showed signs of letting up in January.

Statistics Finland on Monday reported that the year-on-year rise in consumer prices slowed down from 9.1 per cent in December 2022 to 8.4 per cent in January. The slowdown, it viewed, is attributable to factors such as the moderation of electricity price increases.

Electricity prices nonetheless remained among the main drivers of inflation along with diesel prices and interest rates on both mortgages and consumer credit. The factors alleviating inflation, by contrast, included the declines in single-family home prices and non-refundable prescription medication prices.

The release of the inflation data sparked immediate discussion on social media, highlighted Helsingin Sanomat.

Mikael Pentikäinen, the managing director of the Federation of Finnish Enterprises, tweeted that inflation is gnawing away at not only the purchasing power of wage earners, but also that of businesses.

“Many businesses are currently between a rock and a hard place. Excessive pay rises will inevitably lead to temporary and permanent lay-offs,” he commented, evidently pointing to the difficult round of collective bargaining talks.

The Finnish Transport Workers’ Union (AKT) has organised strikes at ports and road transport that has effectively halted the foreign trade of goods in an attempt to secure pay rises that offset the effects of inflation on the purchasing power of employees. Service Union United (PAM) earlier this year staged strikes in grocery trade in an attempt to coax pay rises that safeguard the purchasing power of employees.

Economists have repeatedly cautioned that excessive pay rises could create a wage-price spiral, a positive feedback loop between price and wage increases.

Finnish consumer prices have risen virtually continuously for the past 13 months. The year-on-year rise in consumer prices stood at 0.2 per cent in December 2021 and at 9.1 per cent in December 2022. Although the rate of inflation eased last month, it remains at a level not seen for 40 years, according to Statistics Finland.

Inflation in Finland hit its all-time high of 19.2 per cent in January 1975. An energy crisis was the main reason for the rampant consumer prices also at the time.

Aleksi Teivainen – HT