Swedbank: Average prices not likely to change much in 2016
Although inflation accelerated from 0.3% to 1% in September, Swedbank’s forecast doesn’t expect the average price level to substantially change compared with 2015.
The biggest contribution to the increase in prices was made by alcohol and tobacco, which became more expensive as a result of a rise in excise rates. Alcoholic drinks became 8% more expensive, tobacco products 10%. Strong demand on the domestic market raised the prices of clothes and footwear as well as catering and accommodation, chief economist at Swedbank, Liis Elmik, wrote in a press release.
Food prices rose by 0.9% year on year. According to Elmik, they are also getting more expensive on the global market.
In addition, the prices of transport services increased for the first time in three and a half years, Elmik said. This was due to fuel and plane tickets becoming more expensive.
For the past three months, the price of crude oil on the global market has remained unchanged. According to Swedbank's forecast the price of crude oil will reach $50 a barrel by the end of the year, and $67 a barrel by the end of 2017.
In 2017 the increase in prices is expected to accelerate to 2.5%, mainly as a result of a hike in the prices of raw materials as well as another increase of excise duty rates and value-added tax on accommodation services.
Real net income of employees is to decelerate from 6% this year to 3% next year as a result of the price hike as well as a slightly slower gross income growth.