Sweden’s headline inflation rate fell from +0.2% in March to minus 0.2%, below the Riksbank’s +0.22% forecast in April. Lower mortgage interest costs and fuel prices were offset by higher price inflation for food, alcohol and tobacco and restaurants. The renewed fall in Sweden’s headline inflation rate in April suggests that the Riksbank’s policy easing so far has eradicated the threat that deflation becomes entrenched. Accordingly, further measures will be needed.Capital Economics says – “Overall, today’s data support our view that the Riksbank will cut the main policy rate to -0.5% by the end of the year and may well expand its bond-buying program. It could also introduce other unconventional measures.”
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