Sweden Inflation March 2016

Sweden

Sweden: Inflation climbs in March

April 12, 2016

In March, consumer prices rose 0.5% over the previous month. The result contrasted the 0.3% decrease recorded in February and was slightly above market expectations of a 0.4% increase. According to Statistics Sweden (SCB), transport and clothing showed the largest price increases, while prices for books saw the largest decrease.

Inflation in March was 0.8%, up from 0.4% in February. Inflation has been consistently above zero for the past seven months. This will take some pressure off the Central Bank, which has been struggling to bring inflation in line with its 2.0% target. To this end, the Bank has employed unconventional policy measures, including negative policy rates and a government bond-buying program since the beginning of 2015. Some analysts consider these measures risky as they could potentially lead to imbalances in the domestic economy. Annual average growth in consumer prices was stable in March at February’s 0.1%.

Meanwhile, core inflation—defined as the CPI with mortgage rates held constant—was 1.5% in March, which was up from the 1.1% increase tallied in February.

The Central Bank expects inflation to average 1.3% in 2016 and sees it picking up to 2.5% in 2017. FocusEconomics Consensus Forecast panelists expect inflation to average 0.9% in 2016, which is unchanged from last month’s forecast. For 2017, the panel sees average inflation at 1.8%.


Author:, Economist

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Sweden Inflation March 2016

Note: Year-on-year and month-on-month variation of consumer price index in %.
Source: Statistics Sweden (SCB).


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