Swedish prices continue to drop

Consumer prices in Sweden dropped by 0.6 percent in June on a 12-month basis, according to new figures from Statistics Sweden.

The June fall in prices follows a drop of 0.4 percent in May.

A fall in the price of vegetables and clothing were the key drivers behind the deflation, the statement said.

From May to June, however, consumer prices rose by 0.2 percent owing largely to an increase in housing prices as a result of higher interest rates, according to Statistics Sweden.

Sweden experienced several months of strong inflation last year before tailing off rapidly.

In September, inflation was as high as 4.4 percent year-on-year.

Sweden’s central bank has set itself an inflation target of 2.0 percent year-on-year.

Deflation can hamper economic growth because it reduces businesses profits and discourages investment.

It also leads consumers to put off buying goods in the hope that prices will continue to fall.

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