In Finland, consumer prices increased by 0.6 percent in June compared to a year ago, according to Statistics Finland. Food and non-alcoholic beverages became cheaper by 0.4 percent, while housing, water, electricity, gas, and fuels decreased by 0.9 percent. Alcoholic beverages and tobacco prices rose by 4.3 percent, and clothing and footwear prices increased by 3.4 percent. Education saw the highest price increase of 7.9 percent.
The harmonized consumer price index does not include certain items like owner-occupied housing, gambling, or loan interest. Business economist Roope Ohlsbom noted that Finland’s low inflation has boosted consumer confidence. However, he believes that the European Central Bank’s interest rates are still too high for Finland, resulting in inflation falling below the ECB’s target of two percent.
In the euro area, consumer prices increased by 2.5 percent year-on-year in June. Finland had the slowest inflation rate in the euro area at 0.6 percent. Senior market economist Jari Hännikäinen highlighted core inflation, which remained at 2.9 percent and contributed significantly to annual inflation. The rise in prices in June was primarily driven by services, with service prices increasing by 4.1 percent annually.
The European Central Bank started lowering key interest rates in June, but its monetary policy outlook remains cautious. Core inflation, which excludes volatile items like food and energy, plays a crucial role in policy decisions. The ECB is closely monitoring price pressures and may cut interest rates further in the future based on inflation data.
Market analysts expect the ECB to make another interest rate cut by December, depending on the inflation rate in the euro area. The uncertainty surrounding monetary policy decisions highlights the need for careful monitoring of inflation data.