Wednesday, 7 May 2008
Inflation Issue in Finland : Rent - Vuokrat
According to the Finnish statistic agency, Rent has grown from January to March by a staggering 3.9%.
Maybe it's because, salary are somehow indexed to inflation, a technique comdemned by the ECB but rejected by Finnish politicians at the time. They though they were smart as they played the role of "prophet of the past" but seemed to be completely blind as regard to the future evolution, which is pretty worrying...
It could be as well caused by the fact that the current government has promised income tax cut next year. Thus property renters are anticipating that rise and passing it to the consumer jeorpadizing price stability. State subsidized rent (Social housing) is increasing the most , which is astonishing and outrageous ?!? here- I claim the resignation of the housing minister for incompetence and corruption -
I'm just wondering how the cheap labor imported from abroad can cope in Uusimaa since most of their income will be eaten by high cost of living : rent, food and transportation.
I suppose the Finnish economy will slowly lose its competitiveness in the year to come... Companies, at some point, will have to shed workers and start reducing cost and increasing productivity as seen in 2001.
The problem is that Finland should need and should have needed higher interest rates. Now it's too late and inflation is already creeping up... But what can the ECB do? with Spain, and Italy entering into a recession while country like Germany doing well...
It was already highlighted that rent will tend to rise during or just before a severe recession happen as highlighted in a previous article .