Price stability is where prices change by a small and consistent amount. In other words, monetary policy maintains low and stable inflation. To do this they use interest rates set by the Monetary Policy authority.

A situation in which the average level of prices is neither moving up nor down. Because of measurement error, price stability deemed consistent with a small (in the range 2-3 per cent) rise in the consumer price index.

As a central bank, the Riksbank is responsible for monetary policy. The objective of monetary policy is price stability, i.e. to maintain the average rate of price increases (inflation) at a low, stable level. More specifically the aim is to keep inflation at 2 per cent, with a permitted deviation of +/- 1 percentage point.

An economy with relatively consistent values of goods and services from year to year, all things being equal. When price levels are rapidly fluctuating, businesses and consumers don’t receive clear signals about the buying power of the currency or the relative value of products available to purchase.