Inflation rate now where the Riksbank wants it to be

Inflation rate now where the Riksbank wants it to be

Mundus Weekly

In order for the Riksbank’s Executive Board to feel confident in raising interest rates, inflation rates must be up close to two per cent. According to statistics from Statistics Sweden (SCB), this occurred in March. SCB announced that the inflation rate according to the CPI was 1.9% in March 2018.

But nowadays, the Riksbank uses another benchmark index, namely CPIF, which means CPI with a fixed interest rate. And during March, this index had the inflation rate at 2.0%, right where the Riksbank wants it. This is an increase from 1.7% in February 2018. If the CPIF continues to stay at two per cent, a hike in  interest rates is more likely.

The increase in the CPI from February to March 2018 was due mainly to a rise in prices on clothing (2.3%), electricity (2.6%), transport services (0.5%) and television, film and music services (13.8%), which contributed upwards by 0.1 percentage point each. The increases were offset by lower prices on books (-35.1%), which affected the CPI by 0.1 percentage point downward.

The Riksbank’s interest rate decision will be published, together with the Monetary Policy Report on 26 April. The decision on the repo rate will apply from 2 May 2018.

Photo: Riksbanken