Causality BetCausality between inflation and inflationween Inflation and Inflation
1. Inflation and growth Annual percentage change Source: Statistics Sweden.
15
1. Inflation and growth Annual percentage change Source: Statistics Sweden 1971-1990 1995-20051971-1990 1995-2005 CPI 8.6 1.1 2.8 1.0 GDP 2.1 2.8 1.4 1.2 Standard deviation Average
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Transcript of 1. Inflation and growth Annual percentage change Source: Statistics Sweden.
1. Inflation and growthAnnual percentage change
Source: Statistics Sweden
1971-1990 1995-2005 1971-1990 1995-2005CPI 8.6 1.1 2.8 1.0GDP 2.1 2.8 1.4 1.2
Standard deviationAverage
2. Inflation: outcome and target Annual percentage change
Sources: Statistics Sweden and the Riksbank
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Jan-03 Jun-03 Nov-03 Apr-04 Sep-04 Feb-05 Jul-05 Dec-05 May-06-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Note Inflation measured as CPI.
3. Inflation in Sweden, Norway and Finland
Annual percentage change
Note. Inflation measured as HICP.
Source: Statistics FInland, Statistics Norway and Statistics Sweden
-2
-1
0
1
2
3
4
5
99 00 01 02 03 04 05 06-2
-1
0
1
2
3
4
5
SwedenNorwayFinland
4. Consumer prices for goodsExcluding energy and foodAnnual percentage change
Source: EurostatNote. The data used is HICP - non-energy industrial goods.
-3
-2
-1
0
1
2
3
97 98 99 00 01 02 03 04 05 06-3
-2
-1
0
1
2
3SwedenNorwayFinland
5. Unit labour costs and labour productivity in business sector
Annual percentage change
Sources: Statistics Sweden and the Riksbank
-2
-1
0
1
2
3
4
5
6
7
8
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006-2
-1
0
1
2
3
4
5
6
7
8Unit labour costsProductivity
Note The broken line and grey bar represent the Riksbank’s forecast (IR06:3).
6. Forecasts of inflation in 2005 at various times: the Riksbank and an average of
other forecasters Annual average
Sources: Consensus Inc., Ministry of Finance, LO and Statistics Sweden
0.0
0.5
1.0
1.5
2.0
April 2004 June 2004 Oct 2004 Jan 2005 April 2005 July 2005 Nov 2005 Dec 20050.0
0.5
1.0
1.5
2.0
Average excluding the RiksbankThe RiksbankOutcome
7. Inflation and inflation expectations
Annual percentage change
Sources: Prospera Research AB and Statistics Sweden
-2
-1
0
1
2
3
4
5
94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11-2
-1
0
1
2
3
4
5CPIInflation expectations
8. Consumer prices (CPI) and house prices
Annual percentage change
Source: Statistics Sweden
-2
0
2
4
6
8
10
12
14
16
95 96 97 98 99 00 01 02 03 04 05-2
0
2
4
6
8
10
12
14
16
House pricesCPI
9. The repo rate is assumed to risePer cent
Source: The Riksbank
0
1
2
3
4
5
2004 2005 2006 2007 2008 20090
1
2
3
4
5
Repo rate
Repo rate assumption, 12 October 2006
10. Good international growthAnnual percentage change
Sources: IMF and the Riksbank
0
1
2
3
4
5
6
80 85 90 95 00 050
1
2
3
4
5
6OutcomeForecastAverage 1980-2005
11. Good growth in Sweden tooAnnual percentage change
Sources: Statistics Sweden and the Riksbank
-3
-2
-1
0
1
2
3
4
5
1980 1985 1990 1995 2000 2005-3
-2
-1
0
1
2
3
4
5
OutcomeForecastAverage 1980-2005
12. Inflation increases graduallyAnnual percentage change
Sources: Statistics Sweden and the Riksbank
-2
-1
0
1
2
3
4
00 01 02 03 04 05 06 07 08 09
-2
-1
0
1
2
3
4CPI
UND1X
13. High productivityAnnual percentage change
Sources: Statistics Sweden and the Riksbank
-2
-1
0
1
2
3
4
5
6
7
82 84 86 88 90 92 94 96 98 00 02 04 06 08-2
-1
0
1
2
3
4
5
6
7OutcomeTrend
14. Fiscal policy Stimulates demand and supply
Higher growth and private consumption
Increased employment and greater supply of labour
Overall minor effects on inflation
15. Repo rate is raised to 2.75 per cent Favourable prospects for the
economy: good growth and rising employment.
Monetary policy is expansionary. Falling energy prices give an inflation
rate below target two years ahead, but after this inflation will rise.
