Swedish inflation rises slightly above Riksbank’s view in July

Swedish CPIF inflation came in slightly above the central bank’s forecast in July. On a year-on-year basis, the consumer price inflation came in at 1.7 percent, as compared with Riksbank and consensus expectations of 1.5 percent. Sequentially, consumer price inflation came in at 0.4 percent.

On a year-on-year basis, CPIF inflation came in at 1.5 percent, as compared with Riksbank’s expectation of 1.3 percent. Sequentially, CPIF inflation came in at 0.4 percent. Excluding energy, CPIF stood at 1.7 percent year-on-year. Food prices added 0.3 percentage points to the CPIF sequential figure. It was a broad upturn. Food prices are expected to probably remain high, affecting the inflation forecast for the months ahead, said Nordea Bank in a research report.

Electricity prices also came in higher than anticipated, positively contributing 0.21 percentage points. Costs for dental care subtracted 0.19 percentage points. Markedly, prices for accommodation, which have been high earlier in 2019, dropped back and lowered the CPIF by 0.09 percentage point, while price for car rental rose and added 0.04 percentage point. Services inflation dropped more than expected.

“All in all, inflation has been above the Riksbank’s forecast in June as well as in July, which gives the Riksbank some comfort. Moreover, Fed and ECB are easing monetary policy, Swedish GDP is contracting and employment declining. Thus, the higher than expected inflation is reducing the probability for stimulus measures rather than fuelling the arguments for a rate hike”, added Nordea Bank.