Finland: Inflation jumps in October
November 15, 2010
In October, consumer prices rose 0.4% over the previous month, which repeated the readings tallied in the previous two months. The price rise reflected lower price increases in food (September: +1.3% month-on-month; October: +0.8% mom) and in clothing and footwear (September: +5.1% mom; October: +1.4% mom), which were offset by higher price increases in other categories. Meanwhile, annual inflation jumped from 1.4% in September to 2.3% in October. The spike was the result of a base effect, as food prices had dropped sharply in October last year, owing to a VAT reduction for food products from 17% to 12%. The VAT rate for food products was raised to 13% in July 2010. Annual HICP inflation (as measured by the harmonised index of consumer prices) leapt from 1.4% in September to 2.3% in October, which drove up the annual average HICP inflation rate a notch to 1.5%. In its most recent Economic Outlook Bulletin published in September, the Central Bank projects inflation to average 1.6% this year and to accelerate further to an average of 1.9% next year.