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January saw consumer price inflation in the Nordic countries fall to 3.3%, down from 3.6% in December, signaling a steady return to moderate levels after the sharp increases experienced since the beginning of 2021. The highest point of inflation was recorded in December 2022, reaching 9.1%, following the economic recovery from the coronavirus pandemic. Since then, inflation has been on a consistent decline month over month.

"The annual inflation rate for 2023 averaged 6.2%, indicating a significant drop from peak figures," stated Kristiina Nieminen, a senior statistician at the Statistics Center.

The most significant price increases in January were observed in consumer and mortgage loan interests, prices for international package tours, district heating, and service charges for property maintenance.

The rise in interest rates for housing and consumer loans contributed 2.5 percentage points to the overall inflation rate. This effect continues to reflect the European Central Bank's (ECB) decision to raise the guiding interest rate by 0.25 percentage points in September last year. The increase in district heating prices was attributed to rising production costs.

Conversely, energy prices have seen a decline.

"Prices for transportation fuels, namely diesel and gasoline, peaked in June 2022 due to economic sanctions against Russia. At that time, the average price for diesel was €2.44 per liter, €2.57 for 95-octane gasoline, and €2.67 for 98-octane gasoline. From these short-term highs, prices had fallen by an average of 29% by January this year," Nieminen explained.

In January, the average price per liter was €1.83 for diesel, €1.76 for 95-octane gasoline, and €1.86 for 98-octane gasoline.

Core inflation, which excludes short-term volatile items like food and energy, was at 5.4% in January, slightly down from 5.5% in December. Core inflation aims to measure inflation cleansed of transient factors, thus not including the highly fluctuating prices of food and energy, which are more susceptible to changes month over month. Global economic developments and political situations influence energy prices, while the success of crops domestically and internationally affects unprocessed food items.

Excluding food, non-alcoholic beverages, and energy, the inflation rate for these groups was 1.6% for food and non-alcoholic beverages (down from 2.3% in December) and -13.2% for energy (previously –11.3% in December).

"Core inflation reached its peak in July 2023 at 7.4%. The rise in core inflation was influenced by the ECB's interest rate hikes last year and the increasing prices of services. In July last year, service prices were 9.2% higher than the previous year," Nieminen noted.

"Interestingly, despite the early spring decline in food and energy prices in 2023, the price increases for services and consumer goods continued for a longer period. This delay in the impact of energy price increases on the prices of consumer goods and services likely explains this trend."

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