The inflation rate according to the CPI with a fixed interest rate (CPIF) was 1.5% in July, reported Statistics Sweden on Wednesday. The outcome was marginally higher than analysts and the Riksbank had forecast.
Capital Economics believes the Swedish economy will teeter on the brink of a recession in the third quarter and domestic demand will weigh on inflation pressures. Due to falling capacity utilisation, inflation is likely to be well-below the Riksbank’s target of 2%, which will mean that the central bank will have to revise its interest rate path, says the economic research consultancy, which reiterates its forecast that the Swedish krona will weaken further to SEK 11 against the euro by year-end.
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