Sweden: Deflationary pressures persist in December
January 10, 2013
In December, consumer prices rose 0.3% over the previous month, which contrasted the 0.2% decline recorded in November. According to Statistics Sweden (SCB), the reading was mainly influenced by higher prices for international flights, food as well as for electricity.
Despite the monthly increase, consumer prices fell 0.1% over the same month the year before, which contrasted market expectations of plus 0.1% and marked the second consecutive month in which the economy is mired in deflation. At the current level, prices are well below the Central Bank's (Riksbank) inflation target of 2.0%. For the whole 2012, inflation averaged 0.9%, which was well below the 3.0% registered in 2011.
Meanwhile, the core inflation index - defined as the CPI with mortgage rates held constant - rose 0.3% over the previous month in December, driving annual core inflation up to 1.0% (November: +0.8%).
According to its October Monetary Policy Report, the Riksbank expects inflation to average 0.7% in 2013 and 2.4% in 2014 (previously forecasted: 1.3% and 2.6%, respectively).