Inflation at 0.5 per cent in January

Consumer prices rose by 0.5 per cent in the year to January, and by 0.2 per cent from December to January. This appears from Statistics Finland's Consumer Price Index.

Studied by commodity group, the highest rise in one year was in the price of beverages and tobacco, by 2.2 per cent. Inflation was, however, fuelled above all by the 2.1 per cent increase in transport and communications costs. Of the single commodities, the higher prices of petrol, electricity, second-hand cars, cigarettes and rents raised the price level most. The rise in prices instead, was slowed down by interest rate cuts and the fall in dwelling prices.

The price of food was up from December to January by 0.4 per cent. This was due almost entirely to the price increases of seasonal commodities. Food was still 4.2 per cent cheaper in January than it was the year before. Food curbed the inflation in January only by close on 0.6 percentage points, i.e. without the fall in the price of food the January inflation would have been 1.1 per cent. Last year the lowering effect of food on the inflation was still over one percentage point. The biggest fall in the price of food occurred already a year ago.

The 0.2 per cent increase in consumer prices was clearly speeded up most by the 11 per cent rise in the price of petrol from December to January. Tobacco products were up by 5.9 per cent and electricity by 6.1 per cent in January. Meals at work also became more expensive, as did the subscriptions to newspapers and magazines.

The price increases at the turn of the year were curbed most by the seasonal clothing sales. From December to January, they were also slowed down by lower interest rates and the lower prices of local calls and package holidays as well as by special offers for long-distance train travel.

The calculation method of the consumer price index was revised in January. Instead of the previous arithmetic mean the indices are now calculated at commodity level as a geometric mean. This lowered the change on one month by 0.04 percentage points. The year-on-year change, at 0.5 per cent, was the same as calculated by both methods.

The Consumer Price Index 1990=100 was 112.0 in January
The Cost of Living Index 1951:10 = 100 was 1 390.

Harmonised Consumer Price Index of the EU countries

The consumer price indices of the EU countries will be harmonised in two stages. In 1996 the Member States will produce the so-called interim consumer price index of the stage I. This will be replaced by the Harmonised Consumer Price Index in the second stage, which the Member States will implement from the beginning of next year. The new index will not replace the existing national index in Finland, but on the contrary the two indices will be produced side by side each month.

The stage I interim index will be adjusted from the present national consumer indices by excluding those commodity groups that are handled very differently in the individual Member States. Such commodity groups in Finland include imputation and interest on owner- occupied housing, insurance, health care, package holidays and certain other groups such as membership fees and church tax. The proportion of the commodity groups to be excluded from the present Finnish consumer price index amounts to approximately 23 per cent.

The year-on-year change of the interim consumer price index to be published for the first time now was 0.8 per cent in January. From December to January the change was 0.5 per cent.

Underlying inflation -0.6 per cent in December

The indicator of underlying inflation 1990=100 was 111.0 in December, and the year-on-year change -0.6 per cent.

Source: Consumer Price Index, January 1996
Further information: Kaisa Weckström-Eno, tel. + 358 0 1734 3479 , or
Juhani Pekkarinen, tel. +358 0 1734 3476