Finland’s central bank raises 2022 inflation forecast to 2%

HELSINKI, Dec 17 (Reuters) – Finnish inflation will be higher next year than previously estimated due to supply chain disruptions, component shortages and high raw material prices, the Bank of Finland said on Friday in an update of its projections.

The bank now forecasts inflation will average 2% in 2022, up from the 1.5% predicted in September.

It also cut its forecast for economic growth next year to 2.6%, from 2.8% previously, as supply chain problems will affect output.

“As such, (factors currently pushing up prices) will not cause a permanent acceleration of inflation unless they lead to increasing prices and wages,” central bank chief Olli Rehn told a press conference.

However, he said inflation has been faster in the second half of 2021 than previously anticipated.

“Inflation forecasts are subject to very high uncertainty,” Rehn said.

The bank’s tweaks to its forecasts are in line with the European Central Bank, which on Thursday estimated inflation will be above its 2% target in 2022 but still insisted the current jump in inflation was transitory. read more

Reporting by Essi Lehto; editing by John Stonestreet and Susan Fenton

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