Sweden: Annual consumer prices drop in June
July 14, 2015
In June, consumer prices fell 0.3% over the previous month. The result contrasted the 0.3% increase recorded in May and market expectations of a 0.1% decrease. According to Statistics Sweden (SCB), lower prices for clothing contributed the most to the monthly decrease, followed by lower prices for telephone services and equipment, electricity, food and non-alcoholic beverages, and decreased interest rate costs.
Consumer prices fell 0.4% in June over the same month last year, which contrasted the 0.1% increase tallied in May and was the lowest reading in nine months. June’s fall in consumer prices marks a return to negative territory and will put pressure on the Central Bank, who has been combatting falling price prices with unconventional policy measures. At its 1 July policy meeting, the Central Bank expanded its government bond-buying program and brought its policy rate deeper into negative territory in an attempt to build inflationary pressures in the economy. Annual average variation in consumer prices held at May’s minus 0.1% in June.
Meanwhile, annual core inflation—defined as the CPI with mortgage rates held constant—increased 0.6% in June, which was down from the 1.0% increase tallied in May.
Author: Robert Hill, Economist