Inflation 

Updated: 14.9.2016 - Next update: 14.10.2016
   
 
 
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Inflation 0.4 per cent in August


The year-on-year change in consumer prices calculated by Statistics Finland was 0.4 per cent in August. In July, inflation stood at 0.5 per cent. The slight decline in inflation was influenced, for example, by decreases in the consumer prices of liquid fuels and interest rates from one year ago.

Consumer prices were raised in August by increases in the vehicle tax, hospital fees, dentist fees and rents from one year ago. The rising of consumer prices was curbed most by reductions in the prices of liquid fuels and interest rates from the year before. Examined in the short-term, the fall of inflation was mostly influenced by lower prices of real estate and foreign air transport. From July to August, consumer prices changed by 0.0 per cent.

Source:
Statistics Finland / Consumer price index


Description of indicator

The Consumer Price Index is used as a general measure of inflation.

The Consumer Price Index describes the price development of goods and services purchased in Finland by households resident in Finland. The Consumer Price Index is calculated with a method in which the prices of different commodities are weighed together with their shares of consumption.

Consumer price indices that are reviewed at intervals of a fixed number of years are suitable for short-term examinations. The Cost-of-living Index is a long time series calculated from the latest Consumer Price Index and its development, therefore, follows the Consumer Price Index. Many rents, such as those on dwellings, business premises or land, are usually tied to the Cost-of-living Index.

Along with economic growth, the unemployment trend and the fiscal balance, inflation has a key impact on economic conditions in Finland. High and volatile inflation is detrimental to the economy, consumers and businesses. An effort is made to stabilise the development of inflation, because instability of inflation causes market uncertainty and inefficiency, and adversely affects the planning of investments and savings. The effects of inflation are reflected in ordinary consumers’ purchasing behaviour and purchasing power, and also in companies’ willingness to invest.

The goal of efforts to combat consumer price inflation is to create the best possible conditions for economic activity. Success in achieving targets depends closely on examining the inflation outlook and on making an as timely a response as possible to any acceleration in inflation. Alongside the traditional inflation indicator, the term structure of interest rates and other economic development indicators should be examined. Real-time data, the reliability brought by exactitude, and the adherence of indicators to future expectations play a key role in the choice of economic indicators.