Purchasing power splits in two: down for the poor, up for the rich

Finland's recovery in household purchasing power is not evenly distributed, with the poor's income falling while the rich's grows, according to the Labour Institute for Economic Research (Labore). The bottom tenth of the income scale is expected to see a 3.5 percent decline in purchasing power this year, while the top decile will see a 2.2 percent increase. Over a longer period, from 2023 to 2026, the gap in purchasing power growth could exceed 16 percentage points.

The trend is particularly concerning for renters and single parents, with purchasing power among the lowest income households deteriorating for several years. Milla Nyyssölä, a senior researcher at Labore, explained that the gap is not due to price increases, but rather different income trajectories. This is an unusual situation, as historical data shows that purchasing power among the lowest decile typically does not decline during periods of economic growth.

Consumer confidence has also weakened in recent months, with views of both household finances and the wider economy deteriorating slightly, according to Statistics Finland. Despite remaining optimistic about Finland's long-term economic prospects, consumers are increasingly concerned about the risk of job loss.