Deflation holds it grip on Sweden
The inflation rate was still negative in Sweden during last month as the global recession puts economic growth on hold.
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August was the fifth month running of falling consumer prices in Sweden.
The inflation rate was -0.8 percent in August compared to a year ago, up from -0.9 percent in July. Consumer prices increased 0.2 percent in August compared to July.
Prices on clothing rose 3.8 percent and petrol 2.1 percent while package holidays got 8.2 percent cheaper.
Analysts had predicted an inflation of 0.1 percent on monthly basis and -0.9 percent compared to last year, according to a SME Direkt poll.
Last Sweden's Riksbank said it would hold the repo rate unchanged at record low 0.25 percent in order to “contribute to a stable recovery” of the economy and attain the inflation target of 2 percent. The repo rate is expected to remain at this low level until autumn 2010.
The Swedish economy was hit by consecutive months of rising prices last year, peaking at a 4.4 percent increase in September.
Deflation can hit economic growth because it reduces businesses profits and discourages investment.
It also leads consumers to put off buying goods in the hope that prices will continue to fall.
Sweden's central bank forecasts that prices will drop 0.3 percent this year and rise by 1.2 percent in 2010.
In Norway, inflation in August slowed to 1.9 percent, compared to 2.2 percent the previous month.
Statistics Norway said a drop in the cost of electricity bills was one of the key drivers behind the fall in consumer prices.
But core inflation, excluding energy and tax variations and the measure used by the central bank in setting its monetary policy, increased from 2.3 percent in July to 2.5 percent.
In Denmark, consumer prices rose 1.1 percent on a 12-month basis owing to a rise in the cost of clothing and transport in August, after a rise of 1.0 percent in July, according to data from the official Danish statistics agency.
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Last Updated (Thursday, 10 September 2009 16:47)
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