Sweden’s core inflation accelerates in March, but likely to slow again in coming months

Sweden’s CPIF inflation in March reached 1.5% y/y, more than consensus and Riksbank’s forecast. On a monthly basis, CPIF rose 0.5%. The country’s CPI rose 0.5% m/m in March, as compared with 0.3% in February and consensus expectations of 0.3%. On an annual basis, CPI rose 0.8% last month, slightly higher than consensus expectation of 0.7%. CPIF, stripping energy, accelerated to 1.9% y/y, 0.2% more than the central bank’s projection and 0.1% more than Nordea Bank’s forecast.

Meanwhile, book sales surprised greatly on the downside that reduced the CPI by 0.12% point. Most of the other components were mostly in line with projections. Prices for footwear, domestic travelling, food and clothing rose slightly above expectations.

Nonetheless, the acceleration in core inflation, excluding energy is for a brief period of time and is likely to decelerate again to be on par with the central bank’s projection in the following months, according to Nodea Bank. For the moment, the Riksbank is expected to extend the QE program during its meeting next week or before the current program ends by late June 2016, added Nordea Bank.