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Swedish Inflation Slows as Riksbank Battles Recession Risk

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April 12 (Bloomberg) -- Sweden’s inflation rate fell to the lowest in 17 months after the largest Nordic economy contracted at the end of last year.

The inflation rate fell to an annual 1.5 percent, the lowest since October 2010, from 1.9 percent the previous month, Statistics Sweden said today. That was in line with the median estimate in a Bloomberg survey of six economists. Monthly prices rose 0.3 percent. Adjusted for mortgage costs, prices rose an annual 1.1 percent and a monthly 0.4 percent.

Sweden’s Riksbank cut its main rate for a second meeting to 1.5 percent in February and predicted unchanged rates over the next year to keep inflation close to its 2 percent target as growth slows. The bank in February forecast consumer prices would rise an annual 1.6 percent in March.

“Inflation pressure is low and a weak development of the real economy should prompt the bank to” halve the rate to 0.75 percent by September, Andreas Jonsson, an economist at Nordea Bank AB in Stockholm, said before the report.

The krona was little changed at 8.921 per euro as of 9:57 a.m. in Stockholm. Sweden’s two-year yields were little changed at 1.12 percent.

The Swedish economy will shrink 0.5 percent this year, Danske Bank A/S predicted on April 4 after output fell 1.1 percent in the fourth quarter. Industrial production fell an annual 7.1 percent in February, the most since 2009, Statistics Sweden said on April 10.

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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