Swedish Consumer Prices Decline Less Than Estimated in May

Sweden’s consumer prices declined less than estimated last month as prices on food and household goods rose.

Consumer prices fell an annual 0.2 percent after dropping 0.5 percent the previous month, Statistics Sweden said today. Prices were seen falling 0.3 percent, according to a Bloomberg survey of 12 economists. Prices rose 0.2 percent in the month. Adjusted for mortgage costs, inflation accelerated to an annual 0.7 percent from 0.5 percent and was 0.2 percent in the month.

Sweden’s central bank at its last meeting in April delayed plans for its next interest rate rise until late next year after cutting its inflation forecasts. It kept its main lending rate at 1 percent for a second meeting as concerns of record-high household debt limited the scope for more cuts.

“In the short term we’re seeing a tendency that the economy will weaken and along with that lower inflation,” Deputy Governor Per Jansson, one of six Riksbank board members, said on June 7. At the same time, “the risks surrounding household debt and the housing market are increasing,” he said.

The Riksbank in April said Swedish consumer prices won’t reach target until December next year. It will announce its next rate decision along with new economic forecasts on July 3.

Sweden’s unemployment matched the highest level in almost three years in April as companies cut jobs to cope with falling demand from debt-laden Europe. The country’s exports, which account for about half its output, fell an annual 5.5 percent in the first quarter as the krona made some exports more expensive.

To contact the reporter on this story: Johan Carlstrom in Stockholm at jcarlstrom@bloomberg.net.

To contact the editor responsible for this story: Jonas Bergman in Stockholm at jbergman@bloomberg.net

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