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Inflation hits 2.1 percent in April

Finland's above-average rise was partly due to a sharp drop in fuel prices last year as the Covid crisis began.

Konsta Kelloniitty maksamassa polttoaineen tankkaamisesta.
Consumer prices in April were driven upward by higher fuel costs, compared to a year ago. Image: Antro Valo / Yle

Consumer prices in Finland rose 2.1 percent in April, compared to April 2020, according to data published by Statistics Finland on Friday.

The rate of inflation rose from 1.3 percent in March.

April's increase in the inflation rate was in large part down to a sharp drop in fuel prices that occurred during spring 2020 as the coronavirus pandemic took hold.

Other factors putting upward pressure on the inflation rate were increases in the cost of long-distance train tickets and cigarettes, Statistics Finland said.

These were offset by declining prices of ferry tickets, beer served in restaurants and televisions, which all fell in price compared to last year. There were also year-on-year decreases in the average interest rates charged by mortgage lenders and consumer credit providers.

Consumer prices in Finland rose 0.4 percent between March and April this year, due in part to higher prices for medicines.

1.6 percent in the Eurozone

April's increase is the highest annual change in consumer prices since 2015, which is the reference year for Statistic's Finland's consumer price index. The next-highest rise was seen in October 2018, when prices rose at a rate of 1.5 percent.

Preliminary data from EU statistics body Eurostat showed the Eurozone as a whole saw an average inflation rate of 1.6 percent in April.

"Core inflation, excluding energy and food prices, clearly rose more in Finland in April than it did in the Eurozone on average," said Janne Huovari from Pellervo Economic Research.

"Prices in the Eurozone were weighed down in many countries by the worsening disease situation in the spring," Huovari wrote on Twitter.

Why are prices rising?

After months of pandemic-induced slowdown, many economies are reopening. As people are freed up to spend money, demand increases, and this pushes prices upward.

The European Commission on Wednesday said it expected to see four percent growth in the bloc's economy this year and next.

In Finland the latest Ministry of Finance figures forecast three percent growth.

A major driver in rising prices is the growing price of oil, which is already back at pre-pandemic levels. Fuel costs are drivers of inflation, as a rise in fuel prices is reflected in that of other products.

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