It is thus not only import prices, but also domestic price pressure that has increased more slowly. This could be connected with the higher productivity I mentioned. In this case, it would mean that the economy could grow at a slightly faster rate without inflation accelerating. Particularly as inflation expectations have also declined slightly. Inflation picture and monetary policy When we look ahead somewhat, we can conclude that the temporary fluctuations in energy prices, which have had a strong effect on inflation since the end of 2002 and pushed it down significantly in recent months, are expected to have abated by mid-2005. As Swedish and international economic activity improve, price pressure is also expected to increase. However, in the main scenario inflation is expected to be below the Riksbank’s target both one and two years ahead, mainly due to lower wage cost increases and improved productivity growth. During 2004 UND1X inflation is expected to amount to an average of 0.6 per cent, which is 0.5 percentage points lower than the December forecast. The corresponding figure for 2005 is 1.2 per cent, which entails a revision of 0.4 percentage points for the year. At the end of the two-year period that comprises the main focus of the forecasts, inflation according to UND1X is expected to be 1.6 per cent, on the assumption of an unchanged repo rate. So what are the risks that might upset the picture I have just presented?
The very high growth figures for productivity during the latter part of the 1990s reflected both the macroeconomic stabilisation, an expansion in the private sector relative to the public sector, and in particular the IT expansion. It is unlikely that the development will continue in the same way in the future. However, we know that productivity growth has been surprisingly high in recent years. Many economists are busy working on the question of which factors lie behind this development. It is clear that, unlike the 1990s, it is not a question of high productivity growth in the IT sector and major investment in IT. One theory that has been put forward is that it may perhaps be explained by delayed effects in other sectors of earlier IT investment; that it has quite simply taken time for companies to adjust and to take advantage of the new technology. It is thus difficult to say anything about the durability of the most recent development. However, there are many indications that the long-term increase in productivity now is higher than it was during the 1980s. The widespread structural changes that took place during the 1990s are also an indication of this. Nor should it be forgotten, that the labour force is better educated today than it was ten years ago, particularly with regard to the percentage of those with a university education. There are studies indicating that the improvement in qualifications has also contributed to the growth in productivity.