An aerial view of blocks of flats in Töölö, Helsinki, in October 2021. Housing costs have increased by over 20 per cent in the past couple of years, leaving many middle-income earners unsure about their ability to cope with unexpected costs. (Jussi Nukari – Lehtikuva)


RISING CONSUMER PRICES have left more and more middle-income earners unsure about their ability to cope with an unexpected expense of 1,000 euros, such as replacing a broken fridge or repairing a damaged car, reveals a survey commissioned by Lähi-Tapiola.

The Finnish insurance provider reported last Friday that 75 per cent of respondents earning 35,000–50,000 euros a year estimated that they could not cover an additional expense of 1,000 euros.

The share stood at 55 per cent in 2019.

“The reason specifically for the financial difficulties of middle-income earners is that the cost of living has increased significantly more rapidly than wages,” commented Hannu Nummiaro, an economist at Lähi-Tapiola.

Nummiaro pointed out that the growing uncertainty of middle-income earners in the inflationary environment is not surprising for two reasons: Social security tends to creep up along with prices, thus shielding low-income earners against inflation. High-income earners, meanwhile, have built up buffers in their personal finances.

Inflation started to accelerate after 2020, the first year of the coronavirus pandemic. The consumer price index has since surged by 15 per cent, with food and housing costs rising even faster.

“Overall food prices have already increased by 23 per cent and housing costs by 21 per cent. The proportion of households whose income is trumped by expenses has more than doubled from what was normal during the previous decade,” told Nummiaro.

“Many are financially between a rock and a hard place as a result of the rise in prices unless they have savings that provide some room to manoeuvre.”

Housing, in particular, has a significant impact on the finances of households given that it eats up 37 per cent of the income of low-income earners and 28 per cent of high-income earners, according to YLE.

Kantar Public interviewed a little over a thousand people for the survey in January 2023.

Aleksi Teivainen – HT