Sweden Inflation Below Target

Sweden’s inflation rate slipped back below the central bank’s target in December, highlighting the fragility that has made the Riksbank reluctant to normalize interest rates despite the country’s strong economy, Yahoo reported. Average consumer prices with a fixed interest rate rose 1.9% in the 12 months to December, down from 2% the previous month. The move was in line with consensus forecasts. On a monthly basis, prices rose 0.4%, up from a 0.2% increase in November, mainly driven by higher costs for international flights, package holidays and food. Sweden’s central bank has remained wary of signaling an end to crisis-era stimulus policies, even as peers such as the European Central Bank and Bank of Japan grow more confident. The Riksbank currently plans to start “slowly” lifting interest rates from a record low minus 0.5% around the middle of this year, but the minutes of the central bank’s latest policy meeting showed growing divisions within the executive board over how far Sweden can go if rates haven’t yet started rising in the eurozone.