Perceived inflation and lost consumption demand

The prolonged weakness in household consumption has surprised many forecasters of the Finnish economy. According to the latest national accounts data, private consumption expenditure has fallen to its lowest level since early 2017, excluding the pandemic period.

Several explanations have been proposed for this development, including fiscal consolidation measures in the public sector, increased perceived risk of unemployment, and heightened geopolitical uncertainty. Less attention has been given to the potential role of perceived inflation in shaping household consumption intentions. (AI translation)

• Publication in PDF-format