The objective of the Riksbank’s activities is to ensure that inflation is low and stable.
Inflation is when money declines in value
Inflation means that almost all prices increase and that one can buy fewer goods for the same amount of money. Money thus declines in value. The simplest way of describing this is that one always buys the same basket of goods in the shop and the total price rises, this is inflation. The most common measure of inflation is the change in the Consumer Price Index, CPI.
The target is 2 per cent
The Riksbank has chosen an inflation target of 2 per cent. There is no exact science that says what is the right level for an inflation target. It should be so low that no one takes it into account but it should be sufficiently high to provide buffer against deflation, that is a decrease of the general price level, since this might cause problems. This is why the Riksbank and other central banks have chosen a target of 2 per cent.
Read more
Follow the link below to read more about what inflation means and how it is measured.