Inflation in Sweden falls faster than expected in August
Sweden's inflation rate fell a greater-than-expected two percentage points in August, hitting 7.5 percent, its lowest level in 16 months.
The new Consumer Price Index inflation rate, put together by Statistics Sweden was a shade lower than the consensus of 7.7 percent estimated on average by macroeconomists surveyed by Bloomberg, and down from 9.3 percent in July.
Robert Bergqvist, an economist with Sweden's SEB Bank, expressed his surprise at the "wonderful" inflation data in a tweet, but stressed that the level of price rises was "still too high", meaning the Riksbank central bank would still raise rates in a week's time.
"That should be the last," he said. "Expect the first reduction some time around the summer of 2024."
"This is extremely positive and a step in the right direction, and its exciting to see that inflation is falling a little faster than expected," said Mattias Persson, economist at Swedbank. "But it doesn't change that much in the short term."
He agreed with Bergqvist that the Riksbank was likely to push ahead with hiking the core interest rate, with Swedbank expecting two hikes to come.
"We still have a record-beating weak krona, which is now at even lower levels than when we made our forecast, so I'm still worried that the Riksbank is going to have to act. It's too early to say that the battle is won."
A graph showing the inflation rate in Sweden. Source: TT
According to Statistics Sweden, the price of food fell an average of 0.7 percent from August but was still 9 percent higher than in August last year.
Underlying inflation, with energy prices stripped out fell from 8 percent to 7.2 percent.
"The prices for groceries and electricity fell in August," the agency's price statistician, Caroline Neander, said in a press release. "Even the price of package holidays fell, but that's normal for the season."
Among the goods which fell the most in price were coffee, tea and cocoa, oil and fats, the agency reported in a second release. Ice cream and sweets rose in price.
Among vegetables, carrots fell 21 percent in price compared to July, leeks fell 18.4 percent and grapes 14.9 percent.
The price of cucumbers and cabbage rose 12.4 percent and 9.9 percent respectively.
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The new Consumer Price Index inflation rate, put together by Statistics Sweden was a shade lower than the consensus of 7.7 percent estimated on average by macroeconomists surveyed by Bloomberg, and down from 9.3 percent in July.
Robert Bergqvist, an economist with Sweden's SEB Bank, expressed his surprise at the "wonderful" inflation data in a tweet, but stressed that the level of price rises was "still too high", meaning the Riksbank central bank would still raise rates in a week's time.
"That should be the last," he said. "Expect the first reduction some time around the summer of 2024."
"This is extremely positive and a step in the right direction, and its exciting to see that inflation is falling a little faster than expected," said Mattias Persson, economist at Swedbank. "But it doesn't change that much in the short term."
He agreed with Bergqvist that the Riksbank was likely to push ahead with hiking the core interest rate, with Swedbank expecting two hikes to come.
"We still have a record-beating weak krona, which is now at even lower levels than when we made our forecast, so I'm still worried that the Riksbank is going to have to act. It's too early to say that the battle is won."
According to Statistics Sweden, the price of food fell an average of 0.7 percent from August but was still 9 percent higher than in August last year.
Underlying inflation, with energy prices stripped out fell from 8 percent to 7.2 percent.
"The prices for groceries and electricity fell in August," the agency's price statistician, Caroline Neander, said in a press release. "Even the price of package holidays fell, but that's normal for the season."
Among the goods which fell the most in price were coffee, tea and cocoa, oil and fats, the agency reported in a second release. Ice cream and sweets rose in price.
Among vegetables, carrots fell 21 percent in price compared to July, leeks fell 18.4 percent and grapes 14.9 percent.
The price of cucumbers and cabbage rose 12.4 percent and 9.9 percent respectively.
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