Bloomberg News

Swedish Inflation Slows for Third Month in May Amid Debt Crisis

June 12, 2012

Swedish inflation slowed for a third month in May as Europe’s debt crisis hurts growth in the largest Nordic economy.

The inflation rate fell to an annual 1 percent from 1.3 percent in April, Statistics Sweden said today. That was in line with the median estimate in a Bloomberg survey of 10 economists. Prices fell 0.1 percent in the month.

Sweden’s central bank has cut interest rates twice since December after growth contracted at the end of 2011. It predicted in April it will keep the rate unchanged for more than a year to steer inflation toward its 2 percent target. While growth revived in the first quarter, economic data have since shown a deepening contraction in the service industry and a rise in unemployment.

“We expect year-on-year CPI to continue to decline in coming months, bottoming out below 1 percent this summer,” said Anna Raman, a senior analyst at Nykredit Bank A/S in Copenhagen, in a note before the report. “As household demand has started to stabilize, we expect that firms will be able to pursue some cautious price hikes this year and to a larger extent next year.”

Adjusted for mortgage costs, price gains were an annual 0.9 and were unchanged in the month.

To contact the reporter on this story: Johan Carlstrom in Stockholm at jcarlstrom@bloomberg.net.

To contact the editor responsible for this story: Jonas Bergman in Stockholm at jbergman@bloomberg.net


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