Sweden Inflation May 2016

Sweden

Sweden: Inflation falls in May

June 14, 2016

Consumer prices rose 0.2% in May over the previous month. The result followed a flat reading in April and was slightly below market expectations of a 0.3% rise. According to Statistics Sweden (SCB), increased prices for packaged holidays and fuels drove the monthly increase.

Inflation in May was 0.6%, which was down from the 0.8% recorded in April. Inflation has been consistently above zero for the past nine months, although it is still well below the Central Bank’s 2.0% target. The Central Bank has utilized unconventional policy measures, including negative policy rates and a government bond-buying program, since the beginning of 2015, in order to bring inflation closer to its target. Despite May’s decrease, inflation appears to be following an upward trend. Annual average growth in consumer prices was 0.3% in May, up from 0.2% in April.

Meanwhile, core inflation—defined as the CPI with mortgage rates held constant—was 1.1% in May, which was down from the 1.4% recorded in April.

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 May 2016 1

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


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