Inflation plummets to 1.3 percent

Inflation plummeted to 1.3 percent in June, according to recent figures from Statistics Sweden (SCB).

The KPIF inflation, which excludes interest costs, landed at 1.3 percent in June, according to fresh figures from Statistics Sweden (SCB).

Expectations for the inflation drop in June were high. The average forecast among analysts predicted a significant drop in inflation. KPIF was expected to fall to 1.6 percent, and CPI to 2.9 percent.

But now the inflation figures are falling below the forecasts and the Riksbank’s inflation target—for the first time in three years.

Even CPI falls to 2.6 percent.

The Riksbank’s inflation target is 2 percent.

How Inflation is Measured

Inflation means that the prices of goods and services generally increase over time. Statistics Sweden (SCB) regularly measures inflation, among other things, by calculating how much consumer prices have risen over a year.

The most common measure of inflation is CPI, or the Consumer Price Index. This calculates the average price development for all Swedish consumption, including energy prices and interest rate changes.

The measure of inflation that the Riksbank looks at the most is CPIF. Since 2017, this measure has been used when the bank formulates its inflation target, which is set at 2 percent. CPIF shows the same price development as CPI, but the effects of interest rate changes have been excluded.

The so-called underlying inflation is shown by CPIF, adjusted for energy prices.

Source: SCB