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Finland's inflation hits nearly 8 percent in July

Food and non-alcoholic beverage prices rose by more than 12 percent in July, surpassing general inflation price hikes.

Food prices rose higher than the inflation rate in July. Image: Ismo Pekkarinen / AOP

The general price level in Finland rose by 7.8 percent year-on-year during the month of July. The last time Finland's inflation rate was at a similar level was during the 1980s.

The latest increase follows a general trend of inflation being accelerated by the lasting economic effects of Russia's invasion of Ukraine.

Statistics Finland published the inflation figures for July on Monday, with the rate of 7.8 percent the same as June's. In July, according to Statistics Finland, the biggest increase in consumer prices compared to a year ago was the increase in the cost of electricity, petrol, diesel and renovations of single-family homes.

Based on preliminary data, inflation in the entire Eurozone accelerated to a new record of 8.9 percent.

Bank of Finland Forecasting Manager Meri Obstbaum told Yle that there is still upward pressure on consumer prices, which means that inflation will not slow down anytime soon, or at least not for the next few months.

"The big question now is the development of energy prices and how that impacts other prices. The market's expectation is that energy prices will decrease in a few months, which should bring some relief from inflation. But surely no one here expects a very rapid slowdown in inflation," Obstbaum told Yle.

She added that the sharpest spike in the overall price increase is likely occurring now, or will in the coming months.

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Next year's inflation forecast has changed

Ville Kaitila, a researcher at the economic research firm Etla, also predicted that the inflation rate will not slow down significantly during late summer or early autumn. However, Kaitila pointed out that some products have already seen price increases slow down, especially in transport fuels.

"In some foodstuffs, for example, we can still see the acceleration of inflation. The rise in rents has also been moderate this year, which means that it can be expected that the rise in rents will accelerate and then return to normal levels," he said.

For next year, however, Kaitila said there are good reasons to expect that inflation will slow down overall.

One factor slowing down inflation is technical. When measuring inflation, prices are always compared to the previous year's figures, and next year the price levels for comparison will be exceptionally high.

"Inflation describes the rate of the increase in prices, so even if prices remain high, but not rise further, it will start to slow down inflation at some point," Obstbaum said.

Food prices rise even faster

The price of food and non-alcoholic beverages rose by 12.4 percent in July compared to a year ago, according to Statistics Finland, rising higher than general inflation.

The prices of coffee, fish, flour, potatoes and eggs increased the most. The price of coffee rose by about 46 percent since last July, flour and fish rose by nearly 40 percent, and eggs and potatoes rose by roughly a third.

Statistics Finland noted that no food product's price fell in July, although in June, the price of fresh berries dropped by about seven percent.