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Published: 15 June 2009

Inflation down to zero

The year-on-year change in consumer prices, i.e. inflation, calculated by Statistics Finland faded to 0.0 per cent in May. In April it was still 0.8 per cent. Inflation faded primarily due to fallen food prices and interest rates.

In May, consumer prices were brought down most from twelve months back by reductions in interest rates and liquid fuel prices. Inflation was also lowered by fallen prices of owner-occupied dwellings and real estate, and used passenger cars. Although the prices of food fell from April to May, year-on-year increase in the cost of food was still the biggest contributor to risen consumer prices. Inflation was also pushed up by rent increases, risen prices of restaurant and cafe services, increases in the retail prices of alcoholic beverages, and in the prices of health services.

From April to May, consumer prices fell by 0.2 per cent, mostly due to reductions in food prices and interest rates.

Each mid-month, Statistics Finland interviewers collect around 50,000 prices on 497 commodities from approximately 2,700 outlets for the Consumer Price Index. In addition, some 1,000 items of price data are gathered by centralised collection.

Finland's inflation indicators, May 2009

	Point figure	Year-on-year change	Month-on-month change
Consumer Price Index 2005=100	108.4	0.0 %	-0.2 %
Cost-of-living Index 1951:10=100	1 731
Harmonised Index of Consumer Prices 2005=100	108.7	1.5 %	-0.1 %
Harmonised Index of Consumer Prices at Constant Taxes 2005=100	108.3	1.3 %	-0.1 %

According to preliminary data, inflation in the EMU countries was 0.0 per cent in May

According to the preliminary data on the Harmonised Index of Consumer Prices, the rate of inflation in the EMU countries was 0.0 per cent in May. In April it was 0.6 per cent. The corresponding figure for Finland in May was 1.5 per cent.

The Harmonised Index of Consumer Prices does not include owner-occupancy, games of chance, interests on consumption and other credits or asset transfer and vehicle tax. The consumption items included in the Harmonised Index of Consumer Prices as well as the rules governing its compilation have been defined in EU regulations.

Eurostat's estimate of inflation in the EMU area is based on preliminary data from EMU Member States and on the price development of energy. Eurostat will publish detailed data on Harmonised Indices of Consumer Prices for May on 16 June.

New index: Harmonised Index of Consumer Prices at Constant Taxes

Statistics Finland started to publish a new Harmonised Index of Consumer Prices at Constant Taxes in June 2009. The publication concerned data for May. The index measures the so-called market inflation. The index with constant taxes is based on the Harmonised Index of Consumer Prices. Eurostat intends to start publishing a corresponding index on the EMU countries in summer 2009.

In the Harmonised Index of Consumer Prices at Constant Taxes the impact of value added tax and other commodity taxes has been eliminated by keeping the taxes constant relative to the index base period. The index measures market inflation meaning the change in prices caused by reasons other than changes in commodity taxes. The price impact of tax changes is obtained by comparing the development of the Harmonised Index of Consumer Prices and the index at constant taxes.

No tax changes occurred in May, but alcohol tax rose in January 2009. According to Harmonised Index of Consumer Prices retail prices of alcoholic beverages rose by 4.75 and alcohol prices in restaurants by 1.31 per cent from December 2008 to January 2009. According to index at constant taxes retail prices of alcoholic beverages rose by 0.24 and alcohol prices in restaurants by 0.05 per cent in the same period (market inflation i.e. the change in prices caused by reasons other than changes in taxes). The price impact of a tax change is obtained as the difference of the development of the Harmonised index of Consumer Prices and the index at constant taxes. Due to tax increase impact, retail prices of alcoholic beverages rose by 4.5 and alcohol prices in restaurants by 1.3 per cent.

Other previous changes in commodity taxes had the following impact: Motorcycle tax rose in April 2009 causing a price increase impact in motorcycles by 3.1 per cent. Tobacco tax rose in January 2009. The rise in tobacco tax had a price impact of 2.0 per cent. Alcohol, electricity and fuel taxes rose and vehicle tax fell in January 2008. The alcohol tax increase impact caused a rise in retail prices of alcoholic beverages by 5.1 and alcohol prices in restaurants by 1.4 per cent. The rise in electricity tax had a price impact of 1.8 per cent. The impact of fuel tax increase was 2.8 on light fuel oil and 3.8 per cent on fuels. The decrease in vehicle tax had a price lowering impact on new cars by 7.5 per cent.

The Harmonised Index of Consumer Prices at constant taxes is published monthly in connection with the Consumer Price Index.

Source: Consumer Price Index 2009, May. Statistics Finland

Inquiries: Mr Juhani Pekkarinen +358 9 1734 3476, Ms Christina Telasuo +358 9 1734 3472
Harmonised Index of Consumer Prices: Ms Christina Telasuo +358 9 1734 3472
khi@stat.fi

Director in charge: Mr Kari Molnar

Consumer price index 2009, May (pdf 243.4 kB)

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• Cost-of-living Index 1951:10=100 (15.6.2009)

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Last updated 15.6.2009