As an example, it can be mentioned that prices for technology-intensive goods rose much more slowly than prices for services, even when inflation was high in Sweden during the 1980s. And inflation is currently much higher in many countries around the world, although they face the same development in international prices for technology-intensive goods as Sweden. In connection with this discussion, I would like to make it clear that an inflation target of two per cent does not mean that prices in each of the sub-groups behind the CPI will increase by an average of two per cent. As goods prices are expected to increase more slowly than services prices, service prices must probably increase faster than two per cent on average if the inflation target is to be attained.28 Figure A2 shows that this has not been the case. Closing comments Today I have tried to explain why I am worried about inflation having been below the inflation target for the past three years. This is mainly because a low rate of inflation can have a negative effect on wage formation and thereby the functioning of the labour market, and that the credibility of monetary policy can be damaged, which can mean that future monetary policy is less efficient and that economic planning is made more difficult by unnecessary uncertainty over future prices.
And according to Svensson (2013c), 60,000 more people are now unemployed than if the repo rate had not been raised since 2010. It hardly needs to be pointed out that such calculations are very uncertain. I have previously criticised Svensson (2013b) for focusing on a specific measure of inflation expectations. If one instead uses a different, more accurate, measure of expectations, almost all of the unemployment effect Svensson has calculated disappears (Flodén, 2012). And Söderström and Vredin (2013) point to problems with interpreting causal relationships behind Svensson’s estimated Phillips curve. The claim that unemployment would have been lower if a more expansionary monetary policy had been conducted since 2010 appears more plausible, however. But one can find objections to this conclusion. First, the reasoning presumes that a more expansionary monetary policy would not have caused the crisis scenario that a majority of Executive Board members have expressed as a risk that justifies a higher repo rate (see the article in Monetary Policy Report February 2014). Second, higher unemployment now can be counterbalanced by lower unemployment in the future, as monetary policy can become more expansionary in the future when inflation and inflation expectations today are low. The question is thus whether the low inflation affects the average level of unemployment or merely the volatility of unemployment over the business cycle. 13  Examples are the US Federal Reserve, the Bank of England and the European Central Bank (ECB).