The cancellation stems from an internal debate over the Academy's close ties with a man who this week was convicted of rape and sentenced to two years in prison.
A noted cultural figure in the Stockholm arts scene, the man also stands accused of sexually harassing or abusing women dating back to the mid-1990's. Because of the scandal, seven of the academy's 18 members either stepped down or were forced out in April.
Radio Sweden spoke with Swedish Radio's arts reporter Gunnar Bolin about the fallout and how book sales could be affected by the cancellation of this year's literature prize.
The academy, which is currently working to add more members to its reduced ranks, has said it will award two Nobel prizes in 2019.