Sweden: Inflation reaches an over-four-year high in July
August 11, 2016
In July, consumer prices rose 0.1% over the previous month. The print was in line with June’s result and contrasted market expectation of a 0.2% decline in prices. According to Statistics Sweden (SCB), higher prices for food and international flights drove the monthly increase. The rise was, nonetheless, dampened by a drop in prices for clothing and fuel.
Inflation in July was 1.1%, which was up from the 1.0% recorded in June. July’s result represented the highest rate since April 2012. While Sweden’s inflation is still below the Central Bank’s 2.0% target, July’s reading suggests that it is moving towards the 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 push inflation up. Annual average inflation was 0.5% in July, up from 0.4% in June.
Meanwhile, core inflation—defined as the CPI with mortgage rates held constant—was 1.4% in July, which came in slightly below the 1.5% registered in June.
Author: Andrea Vetrugno, Economist