The pace of inflation is finally starting to show a more noticeable slowdown, as consumer prices in Finland rose by 6.8 percent in May, compared to 7.9 percent in April. The decrease in gasoline prices had the largest impact on slowing down inflation compared to the previous year. The Chief Economist of the Central Chamber of Commerce emphasizes the significant role of mortgage interest rates in domestic inflation measurement, and without them, inflation would have been only 4.9 percent.

It is still unclear how much inflation will slow down and how household purchasing power will recover.

The measurement in May showed that the rise in consumer prices in Finland slowed down to 6.8 percent. From a historical perspective, the inflation rate is still high, but the pace of increase is slowing down rapidly. In April, the inflation rate was still 7.9 percent.

According to Jukka Appelqvist, Chief Economist of the Central Chamber of Commerce, it is important to bear in mind that mortgage interest rates play a significant role in domestic inflation measurement. Without mortgage interest rates, inflation in May would have been only 4.9 percent. The impact of loan interest rates will soon reach its peak on an annual basis, but the increase in average rates will continue for a longer period on a monthly basis.

"We are finally starting to see a more noticeable slowdown in the inflation rate. On a monthly basis, prices did not rise significantly in May, except for mortgage interest rates. Inflation figures for the latter part of the year will be significantly more moderate. The significant contraction of consumer purchasing power has already helped alleviate inflationary pressures on the economy," says Appelqvist.

As usual, the decrease in gasoline prices compared to the previous year had the most significant impact on slowing down inflation. According to Appelqvist, this impact will increase even more next month, as there was a massive price spike for fuel last year in June.

Apart from mortgage interest rates, there are no signs of significant price pressures

Food and non-alcoholic beverage prices rose by 11.1 percent on an annual basis. The increase in food prices was over 16 percent at its highest, so the slowdown has been rapid in this regard as well. However, food prices did not decrease on a monthly basis in May, as they did in the previous month.

In May, consumer prices rose by 0.3 percent compared to the previous month. Typically, the average price level does not increase significantly in Finland during the spring, so the monthly price increase is still higher than average. However, this increase is mainly explained by the rise in average mortgage interest rates.

"The most positive aspect of the May inflation figures is that the monthly price increase was relatively moderate. Mortgage interest rates are still on the rise, but there are not many signs of significant price pressures elsewhere. This is promising for the future, and most likely, the historically high inflation period will soon be just a bad memory. However, there is still uncertainty about whether inflation will slow down to the levels we have become accustomed to in the 2000s and how long it will take for household purchasing power to recover," says Appelqvist.