Consumer price index
19. Jan 2022
Consumer prices up 3.4% from a year ago
A price hike in fuel for household consumption and for transport is the key factor in the total price increase, as it was also in 2020 which saw a total price increase of 3.1%.
The Consumer Price Index (CPI) consists of 12 main categories of goods and services. The effect that each category has on the overall price index is weighted according to consumption levels.
In Q4 2020, the CPI was at 121.6. In Q4 2021 it was 125.8. This means that the CPI has increased by 3.4% over the past year. In Q3 2021 the CPI was at 124.9, which means the CPI increased 0.7% from Q3 2021 to Q4 2021.
Compared to this time last year, prices in 10 out of the 12 main commodity groups have gone up. The commodity groups which saw the highest price hikes were ‘Housing’ (11.9%), ‘Transport’ (4.9%) and ‘Hotels and restaurants’ (4.1%). Prices of clothing and footwear saw a slight decrease on average in Q4 2021 compared to Q4 2020, while education prices have gone down by 1% from a year ago.
Liquid fuel for household heating and for transport represents a relatively large portion of the total Faroese household consumption and thus has a relatively large effect on the total CPI. The international price increase of liquid fuel for household heating and transport was the key reason for the CPI growth during the last year.
While prices of liquid fuels for household heating and for transport saw a relatively large reduction during the first year of the Covid-19 pandemic, the figures for the past year show a return to a steady price increase. Prices of liquid fuels for Faroese household consumption increased by 41% from a year ago. The annual price increase average of the same commodity in 27 EU countries was 57%.
The annual price increase of fuels and lubricants for personal transport equipment is largely the same as the average overall growth rate for EU countries (30%).
Having seen a decline In the wake of the Covid-19 outbreak two years ago, consumer prices in most countries were back at an increase for the majority of 2021. The latest CPI figures show a return to a relatively high price increase in the Faroe Island and in Europe. We are now seeing the biggest annual CPI increase since the financial crisis some 14 years ago.
In terms of the latest annual changes in the overall CPI, the Faroe Islands (3.4%) saw a similar trend to other Nordic countries. In Finland, Sweden, Denmark and Iceland, the annual changes in the overall CPI was between 3.5% and 3.9%, while Norway saw a change rate of 5.8%.
