Inflation in Finland

A short history of inflation in Finland

Devaluation Cycles (1970s to 1991)

Finland ran a familiar post-war pattern: wage rises that outpaced productivity, followed by a devaluation of the markka to restore competitiveness, followed by the inflation the devaluation caused. A credit boom in the late 1980s and the collapse of Soviet trade at the start of the 1990s ended it with the deepest recession in Finnish peacetime history, unemployment above 15% and a banking crisis.

The Euro (1991 to 1999)

The markka was devalued in 1991 and floated in 1992, after which Finland turned decisively towards European integration, adopting an inflation target in 1993 and joining the euro at its launch in 1999, the only Nordic country to do so. Inflation has been low and stable since.

Post-Covid Inflation (2021 to 2023)

In Finland, prices rose fastest in November 2022, at 9.1%. The causes of the post-Covid inflation were global in nature, beginning with the lockdowns: factories and ports closed and the shipping between them fell out of sequence, so goods took longer to make and longer to arrive. Governments had spent heavily supporting household incomes through those closures, so when restrictions lifted there was money waiting to be spent and not enough on the shelves to spend it on. Then in February 2022 Russia invaded Ukraine, disrupting two of the world's largest suppliers of wheat, fertiliser, oil and gas at once, and the cost of everything grown, heated or transported rose with them.

Because the causes were shared, so was the timing: most countries peaked within a few months of one another in late 2022. The major inflation events covers this episode and the others in more detail.