BIS Review 39/2005  Before we can draw any conclusions from such surveys, however, we have to adjust these figures for transportation costs as well as differences in taxes and wage costs. Transportation accounts for only a few per cent of the final food price, and the differences in transportation costs between EU countries in turn are so small that they do not have any great significance for the price differences. Nor are transportation costs likely to be lower in Finland, for example, which has a lower price level than Sweden. The differences in VAT on food, however, are considerable. Swedish VAT on food is 12 per cent, and the general VAT rate is 25 per cent, while the rate is between 0 and 10 per cent in several comparable EU countries and just over 19 per cent on average in the EU15.5 If we adjust for the respective VAT rates, the differences in food prices between Sweden and other European countries turn out to be smaller, but the majority of comparable countries still have up to 10 per cent lower prices. In comparisons between Stockholm and other European capitals, too, the price difference averages roughly 10 per cent when VAT is excluded. Payroll taxes in Sweden are clearly higher than in many other countries; employers’ payroll taxes and social security contributions comprise around 15 per cent of GDP while the median in the EU15 is roughly 7 per cent.
Kristina Persson: Why is inflation so low? The example of the retail sector Speech by Ms Kristina Persson, Deputy Governor of Sveriges Riksbank, at the Nordic Retail College, Norrtälje, 24 May 2005. *  *  *  Introduction Strong forces are affecting the developments in the world economy today. Globalisation and stiffer international competition are having an impact on individual countries' economies in many different ways. In Sweden, this has contributed, among other things, to a very low inflation rate in recent years. The subdued developments in the prices of imported goods partly reflect the integration of countries such as China and India into the world economy. Likewise, the surprisingly robust productivity growth can probably to some extent be attributed to the increased international competition. Also contributing to the low inflation is the increasing establishment of low-price chains in the Swedish non-durables sector in recent years. This increases competition and helps squeeze Swedish food prices. I intend to begin by briefly discussing global structural change in general and thereafter to concentrate primarily on the changes that we are seeing in the Swedish non-durables sector at the moment. Finally, I also intend to touch upon the current economic situation.