Sweden Inflation June 2016

Sweden

Sweden: Inflation reaches a four-year high in June

July 12, 2016

In June, consumer prices rose 0.1% over the previous month. The result followed a 0.2% increase in May and was in line with market expectations. According to Statistics Sweden (SCB), higher prices for electricity and packaged holidays drove the monthly increase. The increase was, nonetheless, dampened by a drop in prices for clothing and vegetables.

Inflation in June was 1.0%, which was up from the 0.6% recorded in May. June’s result represents the highest rate since June 2012. However, inflation is still well below the Central Bank’s 2.0% target. The Central Bank’s unconventional policy measures that include negative policy rates and a government bond-buying program are expected to continue during the second half of 2016 in order to bring inflation closer to its target of 2.0%. June’s reading suggests that Sweden’s inflation is moving towards the Central Bank’s target. Annual average inflation was 0.4% in June, up from 0.3% in May.

Meanwhile, core inflation—defined as the CPI with mortgage rates held constant—was 1.5% in June, which came in well above the 1.1% registered in May.

The Central Bank projects inflation to average 1.5% in 2016 and sees it picking up to 1.8% 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 1.6%.


Author:, Economist

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Sweden Inflation June 2016

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


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