“The rising cost of energy has also increased food prices. The increase in food prices affects all citizens, but especially those with low incomes, for whom the food bill eats up the lion’s share of the income, he said. quoted saying Helsingin Sanomat’s public hearing in the parliament’s trade committee.
Eurostat has reported that consumer prices in the region were 10.6 percent higher in October than last year.
The European Central Bank (ECB) has raised its benchmark interest rates repeatedly this year in an attempt to curb inflation. Although monetary policy can only have a limited effect on energy prices, according to Rehn, political actions are needed in response to rising consumer prices in general. By tightening monetary policy, the central bank tries to avoid, for example, a wage-price spiral.
Finland also needs to prepare for a recession, although it will probably be more of a disadvantage than a major collapse in the country, he said.
“The international economic situation has worsened as a result of this war and the energy crisis. Finland’s economy also reflects that, and it’s worth preparing for that,” said Rehn.
“Right now we’re not talking about a deep collapse, but a mild recession, which will certainly hurt, but which we’re enduring mainly because of solid employment growth,” he added. YLE interview.
However, employment growth should no longer be taken for granted when the probability of a recession increases.
Rehn also expressed his hope that fiscal and monetary policy will be adjusted to curb inflation and not accelerate it. Last week, the International Monetary Fund (IMF) called on the Finnish government to cancel fiscal stimulus measures in order to slow down the accumulation of debt and not to increase inflationary pressures.
“The mission recommends that the financial pulse be reversed next year, partly by better targeting energy support measures. This should be followed by a gradual but well-defined and well-communicated medium-term stabilization plan based on the measures identified in comprehensive spending and tax reviews. read.
“Structural reforms that boost long-term growth remain a priority, including changes to the collective bargaining system that would facilitate adjustment to disruptions and maintain sufficient coordination to safeguard competitiveness.”
Aleksi Teivainen – HT
Source: The Nordic Page