Home > Statistics > Consumer Confidence > 2007 > October > Consumers expect inflation to rise above three per cent

Published: 29 October 2007

Consumers expect inflation to rise above three per cent

Consumers' confidence in the economy remained strong in October. However, it had weakened slightly, as in October the consumer confidence indicator stood at 17.3, having been 18.5 in September and 20.3 in August. When compared with one year ago and with the long-term average, confidence in the economy was still stronger. The data are based on Statistics Finland's Consumer Survey, for which 1,527 people resident in Finland were interviewed between 1 and 19 October.

Of the four components of the consumer confidence indicator, expectations concerning own economic situation improved from the previous month. Views regarding the other components remained unchanged or deteriorated slightly. Consumers continued to believe strongly in their own saving possibilities and in the lessening of unemployment. By contrast, their views about Finland's economy were gloomy. Consumers regarded saving especially worthwhile in October, in contrast to their views on raising a loan or purchasing durable goods. Consumers expected inflation to accelerate clearly in the coming months.

Consumer views on the economic and financial conditions in Finland in October 2007, balances*

	Average 10/95-	Max. 10/95-	Min. 10/95-	October 2006	September 2007	October 2007	Situation***
Consumer confidence indicator (CCI)	13.9	21.8	3.5	14.9	18.5	17.3	+
CCI components:
Own economic situation in 12 months' time	9.5	14.1	2.3	9.7	10.2	12.1	++
Households' saving possibilities in the next 12 months	34.5	52.0	10.9	43.7	51.4	46.6	++
Finland's economic situation in 12 months time	6.1	21.7	-14.0	0.9	-3.5	-4.1	- -
Finland's unemployment situation in 12 months time	5.7	27.6	-22.7	5.4	15.7	14.4	+
Others:
Inflation in 12 months' time, per cent	2.0	3.3	0.7	2.3	3.1	3.3
Own threat of unemployment at present**	4.2	7.2	0.8	1.4	5.3	5.4	+
Financial situation of household at present	25.9	35.1	14.7	30.8	32.7	31.6	++
Favourable time to make major purchases at present	20.9	37.7	-2.1	21.9	12.3	10.9	- -
Favourable time to save at present	8.9	35.4	-19.6	26.8	34.5	35.4	++
Favourable time to raise a loan at present	21.7	42.0	-13.5	17.2	-6.2	-3.3	- -
* The balance figures are obtained by deducting the weighted proportion of negative answers from that of positive answers. The consumer confidence indicator is the average of the balance figures for the CCI components. The balance figures and the confidence indicator can range between -100 and 100. A positive balance figure denotes an optimistic and a negative balance figure a pessimistic view on the economy. ** Own threat of unemployment has only been asked since March 2004. *** ++ Situation is very good, + Situation is good, - Situation is bad, - - Situation is very bad.

In October, 21 per cent of consumers believed that Finland's economic situation would improve in the coming twelve months, while 28 per cent of them thought that the country's economy would deteriorate. One year ago, the corresponding proportions were 22 and 20 per cent. In all, 31 per cent of consumers believed in October that their own economy would improve and only 11 per cent of them feared it would worsen over the year.

Altogether 47 per cent of consumers thought in October that unemployment would decrease over the year, while 18 per cent of them believed it would increase. Twelve months earlier, the corresponding proportions were 38 and 26 per cent. Fourteen per cent of employed persons reckoned in October that their personal threat of unemployment had lessened over the past few months, while 9 per cent thought it had grown.

Consumers predicted in October that consumer prices would go up by 3.3 per cent over the next 12 months. This was the highest prediction ever. The long-term predicted average inflation rate is 2.0 per cent.

In October - as in the couple of months before it - saving was considered worthwhile by a record 79 per cent of consumers. Twelve months earlier the corresponding percentage was 72. Sixty-five per cent of households had been able to lay aside some money and 78 per cent believed they would be able to do so during the next 12 months. Consumers were saving mainly for a rainy day, a holiday trip or to manage debts. The most popular investment targets after bank accounts were diverse mutual funds.

In October, 46 per cent of consumers regarded the time good for raising a loan. One year ago the respective proportion was 64 per cent. Nevertheless, 13 per cent of households were planning to raise a loan within one year.

In October, 40 per cent of consumers thought the time was favourable for buying durable goods. Twelve months earlier, the respective proportion was 44 per cent. Many households intended to spend money on, for instance, home furnishings or travel during the next six months. Intentions to purchase entertainment electronics had decreased slightly, but in October, 25 per cent of households considered purchasing a digital set-top box. Even major purchases were attractive, for 19 per cent of households were fairly or very certain to buy a car and 10 per cent a dwelling in the next twelve months.

Consumer confidence indicator 10/1995-10/2007

Micro and macro indicators of economy 10/1995-10/2007*

* Micro indicator is the average of three balances: own economy and household's saving possibilities in 12 months' time,
and household's financial situation at present.
Macro indicator is the average of two balance figures: Finland's economy and unemployment in 12 months' time.

Consumer confidence indicator in EU member states, September 2007
Deviation of indicator from country average 10/1995-9/2007*

*Calculated from seasonally adjusted series.
Source: European Commission, DG ECFIN, Business and Consumer Survey Results, September 2007
http://europa.eu.int/comm/economy_finance/indicators/businessandconsumersurveys_en.htm

Source: Consumer Survey 2007, October. Statistics Finland

Inquiries: Mr Pertti Kangassalo +358 9 1734 3598,kuluttaja.barometri@stat.fi

Director in charge: Mr Ari Tyrkkö

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Last updated 29.10.2007