Swedish September Inflation Slowed as Euro Woes Sap Growth
Consumer prices rose an annual 0.4 percent in September, down from 0.7 percent the prior month, Statistics Sweden said today. Inflation was estimated at 0.6 percent in a Bloomberg survey of 13 economists. Prices rose a monthly 0.4 percent. Adjusted for mortgage costs, prices rose an annual 0.9 percent and 0.7 percent in the month.
“Many companies, above all in the manufacturing sector, now believe that prices will be lower in the period immediately ahead,” the Riksbank said in a survey of companies published this month. “Price competition has increased and this is squeezing the companies’ margins and profitability.”
The krona has strengthened 5.5 percent against the euro over the past year as investors buy Swedish assets as a haven from the European debt crisis. The central bank last month cut its main lending rate for a third time since December to 1.25 percent to boost flagging growth.
Sweden’s central bank, which targets an inflation rate of 2 percent, last month also predicted it would keep rates unchanged until the middle of next year. Economic growth in Sweden, which sells about half of its output abroad, will slow to 1.5 percent this year from 3.9 percent in 2011, the Riksbank predicted last month. Sweden sells about 70 percent of its exports to Europe where countries are cutting spending to reduce debt.
To contact the reporter on this story: Johan Carlstrom in Stockholm at firstname.lastname@example.org.