Inflation will continue to rise in the coming months, with a slowdown only likely in the second quarter of next year, senior Swedbank analyst Liis Elmik told ETV news show 'Aktuaalne kaamera' (AK), in an interview which follows.
Can it be forecast how long current inflation rates will last?
The rise in prices has been mainly due to higher energy prices, and according to our forecast, energy prices should be at a high level until the spring, when the heating season is over. Because of this, we also expect price rises to slow in the second quarter of next year. In the coming months, we may see even higher price increases than we have seen so far.
September saw the highest rate of inflation for the past 13 years, at 6.6 percent. In the most pessimistic forecast, how high could that figure stretch to?
In our baseline scenario, we forecast a rate of inflation of around 7 percent in the coming months, or slightly above that, it, but in the spring of next year the inflation rate will slow down. Over the year as a whole, we forecast a rate of about 4 percent, while next year the price increase should slow down to between three and four percent.
Is the hope that a return to a fall in inflation will be seen from next summer?
In the second half of next year, we are still expecting prices to rise. While energy prices may start to fall, there are many other goods and services whose prices will continue to rise.
How does this affect households and how does it affect businesses? Who gets hit the hardest?
If we look at the average consumer, the share of energy costs in the family budget within the average family is not as high, while consumers are also aided by the fact that the average salary, including pensions, has grown at about the same pace as prices now. However, of course, there are people whose wages have not increased and they are certainly more difficult.
Is there not a fear that more and more people, or families, are falling towards the brink of poverty? Inflation is painful, but can it be survived?
We can now see that the rise in prices has not significantly put off the average consumer. If we also look at card payment turnover at our bank or, for example, retail figures, they are still growing strongly.
What about for companies?
It is much the same for companies, where the share of energy costs within budgets is even smaller. A national average would stand at around three percent. However, there are companies which are more affected by this rise in energy prices, including the energy industry, some industrial companies such as the paper and pulp industry, and even road transport.
Editor: Andrew Whyte