Finland: Harmonized inflation declines to joint-lowest in over three years in May
Harmonized inflation came in at 0.5% in May, down from April’s 0.6%. May’s figure represented the joint-weakest inflation rate since December 2020 and was among the lowest in the Euro area. Looking at the details of the release, prices for transports plus food and non-alcoholic beverages fell at steeper paces, and price pressures for recreation slowed.
Accordingly, annual average harmonized inflation fell to 1.9% in May (April: 2.3%). Meanwhile, consumer price inflation fell to 1.5% in May from April’s 1.9%.
Lastly, harmonized consumer prices dropped 0.06% in May over the previous month, swinging from April’s 0.09% rise.
Danske Bank’s Pasi Kuoppamäki commented:
“We expect an increase in the VAT rate to 25.5% in the autumn, which will have a fairly direct impact on prices. We expect that inflation will nevertheless remain at a low level, as the falling energy prices will also lower the prices of goods in the longer term and weak demand will increase the pressure for price competition. The fall in inflation combined with the 2024 increase in wage and salary earnings and earnings-related pensions will help increase real purchasing power, which is a key driver for the recovery of private demand.”