Inflation surge pushes prices up by nearly one per cent in March
At this rate, annual inflation could reach levels of 1970s
Prices in Finland rose by an average 0.9 per cent in March, according to Statistics Finland.
Prices rose very quickly. One factor was the end of post-Christmas sales, which especially raised the prices of clothing, says Juhani Pekkarinen of Statistics Finland.
If the rate were to stay the same all year, the annual inflation rate would reach 11.3 per cent, up from 2.5 per cent for last year. The rate would be the highest seen in Finland since the 1970s. Under the price stability goals of the European Central Bank, inflation is seen to be under control if it is no more than two per cent a year.
Comparing the price level in March this year to that which prevailed a year earlier, prices had risen by 3.9 per cent.
The figure is higher than has been the case in Finland in recent years.
A number of factors have contributed to the rising prices. Housing costs have grown with the high interest rates and rising rents.
Food has become more expensive on the world market, which is reflected in Finland in higher prices at the grocery store.
Market prices of energy, such as fuels and electricity, have risen sharply.
The biggest boost to the price level stems from the higher taxation of fuels, electricity, and alcohol, notes Pekkarinen.
Tax hikes are evident each month, when prices are compared with those of the previous month, when taxes had not been raised yet.
"Almost everything for this March inflation, happened at the turn of the year", Pekkarinen says.
>Changes in taxation have a significant influence on prices.
In Finland, inflation fell to near zero in 2004, largely due to the reduction in the tax on alcohol, in a situation in which price developments were otherwise very moderate as well.
Previously in HS International Edition:
Warm weather reduces wholesale, but not retail price of electricity (19.1.2007)
Research institute predicts that upward pressure on food prices will lessen in 2009 (4.4.2008)
Cheaper electricity brought about by mild winter fails to translate into lower consumer prices (20.3.2008)