prisstabilitet

Prisstabilitet, or price stability, is a macroeconomic condition in which the general level of prices remains relatively constant over time. In practice, it means low and predictable inflation and, ideally, minimal risk of deflation. Price stability reduces the uncertainty surrounding future costs and incomes, making long-term planning for households and businesses more reliable.

Measurement and targets vary by country, but inflation is typically tracked with indices such as the consumer price index (CPI) or the GDP deflator. Core measures, which exclude volatile items like food and energy, are often used to gauge underlying inflation. Many central banks pursue an explicit inflation target, commonly around 2 percent per year, with symmetry in deviations to avoid persistent undershooting or overshooting.

Policy and mechanisms. Central banks influence price stability primarily through monetary policy instruments, especially the policy interest rate and, when appropriate, unconventional tools. Credible actions and transparent communication help anchor inflation expectations, which in turn influence actual inflation and wages. Some economists advocate price-level targeting as an alternative: instead of aiming for a fixed inflation rate, policymakers strive to keep the overall price level on a predetermined path over time.

Benefits and limitations. Price stability lowers menu costs and fosters investment, productive planning, and wage negotiations. It is a key anchor for expectations and can support sustainable growth. However, it is not a panacea for unemployment or real economic imbalances. Supply shocks, measurement biases, and the risk of deflation pose challenges, and monetary policy must balance price stability with other objectives such as output stabilization and financial stability.

See also: inflation targeting, central banking, monetary policy, price level targeting.