If this continues, Sweden will soon experience deflation

Today's report from The Central Bureau of Statistics (SCB) shows that inflation continues to fall in Sweden. The inflation rate, i.e. the change in the CPI from the same month in the previous year, was 1.9% in August 2024. That's down from July when it was 2.6%, which is more than expected. The monthly change from July to August was -0.6%, according to the CPI.

Transport prices, for example international air travel and car rental, also fell, which can be explained by the reduction in fuel prices. In addition to fuel prices, the prices of food, non-alcoholic beverages and package tours have also fallen. The price reductions were countered, among other things, by higher clothing prices.

The rate of inflation according to CPIF, which, unlike the CPI, is not affected by changes in interest rates on household mortgages, was 1.2% in August. It is also down from July, when it was 1.7%. Most analysts believe that the Swedish central bank AKA Riksbanken will lower the policy rate at the next publication of the monetary policy decision including the policy rate on September 25.

Today's inflation report will most likely increase the criticism of the Swedish central bank and its head Erik Thedéen for not having lowered the policy rate earlier. It currently stands at 3.5%. Many analysts claim that the reason why inflation continues to be pushed down below both the market's and Riksbanken's expectations is because Riksbanken has been sitting on the fence. The only thing driving inflation right now is increased costs as a result of interest rate hikes, which is a warning sign. At the moment, public finances are on their knees with an economy that is not developing, high unemployment and companies hanging by a thread.