Sweden Inflation January 2017

Sweden

Sweden: Inflation moderates in January

February 17, 2017

Consumer prices dropped 0.7% in January, contrasting the 0.5% increase observed in December. The print, which marked the sharpest drop in two years, met market analysts’ expectations. According to Statistics Sweden (SCB), CPI normally falls in January as a result of seasonal fluctuations in prices. Clothing and footwear, international flights and package holidays were among the components that experienced the largest drops.

Inflation edged down from December’s almost five-year high of 1.7% to 1.4% in January. The print came below the 1.5% increase markets had expected and marked the first moderation in inflation since September. The drop came as a blow to the Central Bank’s effort to prop up prices in the country as inflation now stands further away from the Bank’s 2.0% target. The recent rally in the krona, which made imported goods cheaper, is chiefly to blame for January’s drop. Meanwhile, annual average inflation remained steady in January at the 1.0% print observed in December.

Lastly, core inflation—defined as the CPI with mortgage rates held constant—was 1.6% in January, down from December’s 1.9%.

In its February Monetary Policy Report, the Central Bank projects that inflation will average 1.6% in 2017 and sees it picking up to 2.1% in 2018. FocusEconomics Consensus Forecast panelists expect inflation to average 1.6% in 2017, which is up 0.1 percentage points from last month’s forecast. For 2018, the panel sees average inflation at 1.9%.


Author: Jean-Philippe Pourcelot, Economist

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Sweden Inflation Chart


Sweden Inflation January 2017

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


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