Sweden: Annual consumer prices fall relatively less in July, providing some relief to embattled Central Bank
August 13, 2015
In July, consumer prices were unchanged over the previous month. The result was up from the 0.3% decrease recorded in June and also overshot market expectations of a 0.3% decrease. According to Statistics Sweden (SCB), lower prices for clothing and electricity were offset by higher prices for food and international flights.
Consumer prices fell 0.1% in July over the same month last year, which marked an improvement compared to the nine-month low 0.4% decrease tallied in June. The fall in consumer prices in June marked a return to negative territory and put pressure on the Central Bank, which has been combatting falling prices with unconventional policy measures, including negative policy rates and a government bond-buying program. The relatively better result in July lessens the need for the Central Bank to make further moves in its September meeting. Annual average variation in consumer prices held at minus 0.1% in July for the fifth straight month.
Meanwhile, annual core inflation—defined as the CPI with mortgage rates held constant—increased 0.9% in July, which was up from the 0.6% increase tallied in June.
Author: Robert Hill, Economist