HELSINKI, Aug. 6 (Xinhua) -- Sweden's inflation rate fell sharply in July, preliminary data showed Thursday, largely due to lower energy prices and temporary government measures aimed at reducing household costs.
Inflation measured by the Consumer Price Index (CPI) fell to 0.2 percent in July from 0.7 percent in June. Inflation measured by the Consumer Price Index with a fixed interest rate (CPIF), the gauge targeted by Sweden's central bank, dropped to 0.7 percent from 1.3 percent, according to Statistics Sweden.
"Energy prices decreased significantly in July, which contributed to a lower inflation rate according to CPI and CPIF," Statistics Sweden statistician Mikael Nordin said.
Government measures, including cuts to fuel and electricity taxes, lower public transport costs and a temporary halving of the value-added tax on food, have also helped curb inflation, Swedish media reported. However, most of the measures are temporary, raising concerns that inflationary pressure could return once they expire.
Johan Carlstrom, an economic commentator at Swedish newspaper Svenska Dagbladet, said inflation could face renewed upward pressure once the measures are withdrawn. Support for commuters and lower fuel costs is scheduled to end in December, while the reduced VAT rate on food will remain in place through the end of 2027.
Alexander Noren, an economic commentator at Swedish Television (SVT), cautioned that the decline did not tell the whole story, pointing to higher inflation when volatile energy prices were excluded.
Sweden's central bank, the Riksbank, targets annual CPIF inflation of 2 percent. It will announce its next monetary policy decision on Aug. 20. The policy rate currently stands at 1.75 percent.
The Swedish government cut fuel taxes in May and again in July, after reducing the electricity tax in January, partly to shield households from higher energy costs caused by the U.S.-Iran conflict and disruptions to global energy supplies stemming from the Strait of Hormuz crisis.
