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Swedish prices keep on falling fast as Inflation rate just 1.9 percent

Thursday, 16 February 2012
The Swedish inflation rate was 1.9 percent in January, down from 2.3 percent in December.

The Swedish Consumer Price Index (CPI) decreased by 0.9 percent from December 2011 to January 2012. However, price decreases accounted for 0.5 percentage points only. The remaining decline in the CPI was explained by the reweighting effects of the consumption basket, writes statistic Sweden in a latest report.

Analysts had expected that consumer prices would have fallen 0.5 percent on a monthly basis and increased by 2.3 percent compared to March 2011, according to consensus forecast survey.
The Riksbank's forecast from the Monetary Policy Report, published on December 20, was a CPI inflation of 2.1 percent in January. In the December period, consumer prices were 0.2 percent during the month, while the inflation rate measured 2.3 percent.

SCB writes in a comment that falling consumer prices during the month primarily due to changes in the basket composition and unusually large price reductions on clothing and shoes.

Seasonally normal price decreases for clothing and footwear (-13.5 percent) contributed downwards by 0.8 percentage points to the change from December to January. Lower prices on audio-visual, photographic and information processing equipment (-5.2 percent) and decreased interest costs for owner occupied housing (-0.7 percent) contributed downwards by 0.2 percentage points each. Further, price decreases for international flights (-20.2 percent) and package holidays (-5.3 percent) along with lower restaurant prices (-1.4 percent) contributed downwards by 0.1 percentage points each.

The price decreases were partially counteracted by higher prices for medical services (8.4 percent) which contributed by 0.1 percentage point. Rises in the price of fuel (4.5 percent) and electricity (2.2 percent) as well as higher rents (1.0 percent) contributed upwards by 0.1 percentage points each.

The expectation was a rise of 1.0 percent annualise rate, according to analysts consensus forecast survey. The Riksbank's forecast tracker pointed to a rise of 1.1 percent annual rate.
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