Dec. 13 (Bloomberg) -- Swedish consumer prices fell for the first time in three years in November on an annual basis as central bank rate cuts sent mortgage costs lower and the European debt crisis capped demand for Swedish exports.
Consumer prices fell an annual 0.1 percent compared with growth of 0.4 percent the previous month, Statistics Sweden said today. Prices were seen to stay unchanged according to a Bloomberg survey of 10 economists. Prices fell 0.2 percent on the month. Adjusted for mortgage costs, price gains slowed to an annual 0.8 percent. Prices declined a monthly 0.2 percent.
“The Riksbank will cut rates in December” as Sweden is “heading towards deflation,” said Per Sellden, an analyst at Swedbank AB in a note before the report. “Inflation is already at low levels and is expected to be low for a long time.”
The Riksbank in October signaled a 28 percent likelihood it will cut interest rates for a fourth time in less than a year next week as slowing demand for its products from Europe puts a lid on economic activity in the largest Nordic country, which exports about half of its output. About 70 percent of exports go to Europe where countries are cutting spending to reduce debt.
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