Home > Statistics > Consumer price index > 2009 > October > Inflation fell to -1.5 per cent in October

Published: 13 November 2009

Inflation fell to -1.5 per cent in October

The year-on-year change in consumer prices, i.e. inflation, calculated by Statistics Finland dropped to -1.5 per cent in October. In September it stood at -1.0 per cent. The decrease in consumer prices was accelerated mainly by the reduction of the value added tax on food. From September to October, food prices fell by 5.6 per cent, slightly more than the impact of the reduced tax rate. At the moment, the price of food is almost at the same level as in January 2008 when food prices started to increase.

In October, consumer prices were brought down most from the year before by reductions in interest rates. Reductions in the prices of food, liquid fuels, owner-occupied dwellings and real estate also brought inflation down. By contrast, consumer prices were pushed up most by increases in the retail prices of alcoholic beverages, and prices of restaurant and café services, and risen rents and tobacco prices from the year before.

From September to October, consumer prices fell by 0.5 per cent, primarily due to the reduction of the value added tax on food.

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, October 2009

	Pisteluku	Vuosimuutos	Kk-muutos
Consumer Price Index 2005=100	107.9	-1.5 %	-0.5 %
Cost-of-living Index 1951:10=100	1 723
Harmonised Index of Consumer Prices 2005=100	108.7	0.6 %	-0.5 %
Harmonised Consumer Price Index at Constant Taxes 2005=100	108.7	0.8 %	0.0 %

According to preliminary data, inflation in the EMU countries was -0.1 per cent in October

According to the preliminary data on the Harmonised Index of Consumer Prices, the rate of inflation in the EMU countries was -0.1 per cent in October. In September it stood at -0.3 per cent. The corresponding figure for Finland was 0.6 per cent in October.

The Harmonised Index of Consumer Prices does not include owner-occupancy, games of chance, interests on consumption and other credits or levies such as asset transfer tax and the vehicle tax. The consumption items included in the Harmonised Index of Consumer Prices as well 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 the Harmonised Indices of Consumer Prices for October on 16 November.

The year-on-year change in the Harmonised Index of Consumer Prices at Constant Taxes was 0.8 per cent in October

The year-on-year change of the Harmonised Index of Consumer Prices was 0.6 per cent and that of the Index at Constant Taxes 0.8 per cent in October. From October last year, prices fell by 0.2 per cent due to changes in commodity taxes. The month-on-month change of the Harmonised Index of Consumer Prices was -0.5 per cent and that of the Index at Constant Taxes 0.0 per cent in October. In October, the value added tax on food was reduced by five percentage points from 17 to 12 per cent and alcohol tax was increased by 10 per cent.

The lowering of the value added tax had a downward impact of 4.3 per cent on food prices in October. However, food prices fell slightly more, that is, by 5.6 per cent according to the Harmonised Index of Consumer Prices. According to the Index at Constant Taxes, the month-on-month change in the cost of food was -1.3 per cent.

By contrast, alcohol tax rose in October. The impact of this tax change on the price of retail alcohol was on average 4.5 per cent and that of restaurant alcohol 1.4 per cent. According to the Harmonised Index of Consumer Prices the price of retail alcohol increased by 4.5 per cent and that of restaurant alcohol by 2.6 per cent from September to October. According to the Index at Constant Taxes the price of retail alcohol remained unchanged but that of restaurant alcohol rose by 1.2 per cent at the same period. Thus, the price of retail alcohol rose in average accordingly to the price impact of the tax increase while the price of restaurant alcohol rose somewhat more.

Statistics Finland started to publish a Harmonised Index of Consumer Prices at Constant Taxes in June 2009.In the Index at Constant Taxes the impact of the changes in the value added tax and other commodity taxes on inflation has been eliminated by keeping the taxes constant relative to the index base period. The index measures market inflation or the change in prices caused by reasons other than changes in commodity taxes. The price impact of the tax changes is obtained by comparing the development of the Harmonised Index of Consumer Prices and the Index at Constant Taxes.

 

Source: Consumer Price Index 2009, October. Statistics Finland

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

Director in charge: Kari Molnar

Consumer price index 2009, October (pdf 252.5 kB)

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• Cost-of-living Index 1951:10=100 (13.11.2009)

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Last updated 13.11.2009