Swedish inflation remains above Riksbank’s view in May, additional stimuli measures less likely

Swedish CPIF inflation slowed less than forecast in May and continued to be close to the target rate of 2 percent. The CPIF gauge of inflation came in at 1.9 percent year-on-year in May, as compared with the Riksbank’s projection of 1.7 percent and consensus expectations of 1.8 percent. CPIF, excluding energy was 1.6 percent year-on-year, which is 0.3 percentage point higher than the Riksbank’s view.

CPIF rose 0.16 percentage point more than what was expected on a sequential basis. Foreign travelling prices again surprised on the upside, positively contributing 0.09 percentage point to the headline inflation. Furthermore, prices for services rose more than anticipated, while food prices were low in the month.

Inflation gauged by the consumer price index remained at 0.6 percent on a sequential basis, whereas it slowed to 1.7 percent year-on-year. The year-on-year figure came in above Riksbank’s projection of 1.5 percent.

Overall, inflation continues to be above the central bank’s view. This is welcomed by the bank and makes more stimuli measures less likely, noted Nordea Bank in a research report. But any turnaround in the central bank’s monetary policy stance is still a long way off.