Inflation increases everyone’s expenses. If you haven’t yet found out how much your own expenses will increase, you should do it today at the latest, writes Iltalehti columnist Merja Mähkä.
We have a miserable autumn ahead of us in Finland, writes columnist Merja Mähkä. Alamy/AOP
This summer has been absolutely terrible for the economy of ordinary people – and often unfair.
I woke up to the horror when I started to find out in July how much our family’s expenses would increase in the fall.
I started with a mortgage. Finland’s most popular reference interest rate, the 12-month Euribor, was thought to settle at a level of over 2 percent at the end of the year. When the average size of a loan in Uusimaa is 140,000 euros, such an increase in interest would mean an increase of a good ton in interest expenses per year.
I switched from a mortgage to electricity. If we had to make a fixed-term electricity contract now, the electricity would cost 5 times more than a year ago, when our own electricity contract was signed. In our four-person district heating economy, electricity would be used again about a ton more per year. In addition, it is reasonable to assume that the price will rise at some point, because the price of district heating will also rise.
Then I started checking the price of the food. It’s just gone up! Coffee and flour 30 percent, fresh fish an incredible 46 percent! In our family, food expenses have also probably increased by around 1,000 euros per year.
When you wallow in your own sorrows enough, it’s easy to become blind to how much bigger sufferers inflation is.
Let’s take energy for example. The future increases in our family’s energy costs are small and fluffy compared to those electric heaters, for whom a thousand euros a month in winter is not enough for the increased energy costs.
Our family also doesn’t have a car, so we don’t suffer from the increase in gas prices either. Sure, HSL plans to raise prices, but the scale is different.
We are relatively worry-free with the mortgage as well, because our loan is cheaply interest-protected. I would like to declare that as a visionary I guessed that interest rates would rise last spring, but the truth is that I agreed to the interest rate hedge because it was very cheap and my terribly cautious spouse wanted it.
When it comes to food, inflation is pretty even – the majority can choose what they eat, or even stop drinking coffee if they want to, for example. But otherwise, inflation treats people terribly unfairly, so that it has nothing to do with conscious human choices.
You can always say that driving a car, drinking coffee and taking out a large mortgage are choices, but in reality there are many things that lead to them that you can’t really do anything about.
We have a miserable autumn ahead of us in Finland.
While some cope with rising prices by panicking and taking less saunas, others face bills that no one could have imagined even a year ago. I’m always the first to speak in favor of financial preparation, but if you hit the bandit sector many times in the inflation game, the more prepared person will suddenly run out of money.
It is comforting that the situation is temporary. For example, the price of electricity is expected to settle at a more normal level already next year.
But persistence is required and it is required of everyone. And at that point, it would be good to remember that you may have been lucky, even if it doesn’t feel like it.
If you haven’t yet found out how much your own expenses will increase, you should do it today at the latest. It’s easier to live with knowledge than vague anxiety.