SEK appreciation to have marked consequences for Sweden inflation outlook

Sweden's trade-weighted exchange rate is almost 2 percent stronger than assumed by the Riksbank. If the Riksbank does not act at the monetary policy meeting in October, the krona is likely to appreciate further. 

Food prices have been relatively high this year. They are expected to edge down in September, which they normally do during the autumn. The forecast of lower food prices is supported by the stronger SEK and that price increases at the import and producer levels have been lower than at the consumer level.

"In such a scenario, the SEK appreciation will have marked consequences for the inflation outlook, something that the Riksbank will probably avoid. Therefore, the Riksbank is expected to take more action", says Nordea Bank.

Prices for non-domestic travelling continue to be a wild card. They were surprisingly low in August. Prices for travelling are well correlated with the SEK. If the historical pattern is repeated then the year-on-year figure should peak soon.