Sweden Inflation August 2017

Sweden

Sweden: Inflation eases in August

September 12, 2017

Consumer prices in Sweden fell 0.2% in August on a month-on-month basis, contrasting the previous month’s 0.5% increase. Data released by Statistics Sweden (SCB) showed that a significant drop in the prices for package holidays and international flights offset higher prices for clothing and housing, water, gas, and electricity and other fuels.

Inflation eased to 2.1% in August, down slightly from 2.2% the previous month and below market analysts’ expectations of no change. August was the second consecutive month in which inflation remained above the Central Bank’s 2.0% target. As inflation has been stabilizing near the target in recent months, there will be added pressure on the Central Bank to normalize its monetary policy. It is expected, however, that the Riksbank will stand firm: A rate hike is not expected before a similar decision from the European Central Bank. Meanwhile, annual average inflation came in at 1.6%, the highest reading in nearly five years and slightly above the previous month’s 1.5%.

Core inflation, which is defined as the CPI with mortgage rates held constant, edged down to 2.3% in August (July: 2.4%).

In its September Monetary Policy Report, the Central Bank upgraded its inflation outlook and now expects inflation to average 1.8% in 2017 and pick up to 2.1% in 2018. FocusEconomics Consensus Forecast panelists expect inflation to average 1.7% in 2017, which is unchanged from last month’s forecast. For 2018, the panel also sees average inflation at 1.8%.


Author:, Economist

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Sweden Inflation August 2017 1

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


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