THE RISE in food prices has picked up pace after letting up slightly for a couple of months, reports YLE.
Finnish food prices surged by 16.3 per cent year-on-year in February, according to data published by Statistics Finland. The rise in food prices had let up slightly in the two previous months, but it re-accelerated last month to a level not seen last year.
Food prices had increased by 16.1 per cent in November and December. The sharpest yearly increase in food prices was recorded nearly six decades ago, in 1964, as food prices rose by an average of 12 per cent.
The prices of sugar, flour, butter and eggs all increased by more than 30 per cent from the previous year in February. The surge in coffee prices that made headlines last year has eased significantly after peaking at over 50 per cent last year, currently standing at around seven per cent. The year-on-year change in fresh fish prices has decelerated from almost 50 per cent last year to about 17 per cent.
Statistics Finland highlighted that prices did not drop in any food product category.
Finns on average spend 27 per cent of their consumption on housing, 13 per cent on food and 12 per cent on transport. Housing costs increased by almost 12 per cent year-on-year last month, driven by a 173-per-cent jump in interest rates on housing loans. Transport costs, in turn, crept up by roughly three per cent from the previous year.
Overall, the year-on-year change in consumer prices stood at 8.8 per cent in February, an increase of 0.4 percentage points from January.
YLE pointed out that the purchasing power of households deteriorated particularly last year, with wages struggling to keep step with rampant inflation. Real income is expected to recover at least moderately this year as wages and pensions are expected to creep up and the surge in consumer prices is to slow down.
“It’s possible that the decline in purchasing power comes to an end, but whether the pay rises will be enough to compensate for the dent in real income is a good question,” Ilkka Kiema, the director of forecasting at Labore Institute for Economic Research, commented to YLE.
The daily finances of households are affected, on one hand, by how much inflation will slow later this year and, on the other, by how much wages will rise.
Finland continues to be faced with a labour shortage, reminded Kiema. This typically means that pay rises exceed the rises agreed on in collective bargaining negotiations and that people work more overtime, with overtime bonuses consequently propping up purchasing power.
Aleksi Teivainen – HT