Swedish producer prices have witnessed a downward trend since May 2015, due to lower prices for commodities and petroleum products. The downward trend continues as December producer prices dropped by -0.7 percent m/m and -1.9 percent y/y, while prices for imported consumption goods dropped to 3.1 percent y/y in December from 3.1 percent y/y in November. However, the year-on-year figures are likely to decline in the forth coming months as SEK is seen 3 percent stronger as compared to year ago (trade weighted, KIX).

If the SEK strengthens, then the deflationary impulses are likely to be stronger, hence explaining the reason why the Riksbank is keeping the SEK in check.

"We expect the Riksbank to cut rates by 10bp to -0.45% in February" - Nordea Markets