Inflation Drops Sharply

New figures from Statistics Sweden (SCB) show that the inflation rate continues to fall in Sweden. In July, inflation was at 0.2 percent according to the CPI, a clear decrease from 0.7 percent the previous month.

The CPIF, which is the measure the Riksbank uses as a target for monetary policy, also continued downward. The inflation rate according to the CPIF landed at 0.7 percent in July, compared to 1.3 percent in June.

An important explanation for this development is falling energy prices. In July, electricity became about 12 percent cheaper, while fuel prices dropped by around 10 percent. This is stated in a press release.

The decline was simultaneously offset by several price increases. Package holidays and car rentals became more expensive, which is common during the summer. Electronics prices also rose unusually much, especially for computers.

Looking over the past year, the picture is different for several goods and services. Food prices were in July 7.4 percent lower than the same month last year. Prices for dental care and local transport had also fallen, while for example, package holidays as well as restaurant and accommodation prices had become more expensive.

Between June and July, consumer prices in total dropped by 0.3 percent.

Another measure used to track inflation is CPIF-XE, where energy prices are excluded. There, the inflation rate rose from 0.4 percent in June to 0.6 percent in July. This measure is often used to get an idea of underlying price developments.