Sweden wage growth expectations probably on lower side

In Sweden's currency effects, the current inflation "success" to a large part comes from the weakening SEK and that underlying inflation probably would be around 1% otherwise. 

The imported inflation model moreover shows that the CPI effects from the SEK are peaking, unless the SEK is allowed to weaken substantially more.The Riksbank instead forecasts a marked strengthening of SEK the coming years, very much opposite to the massive SEK depreciations that occurred in 2000/2001 and 2008.

"Wage growth shot up towards 4.5% y/y both in 2001 and 2007, but there are no signs of a repeat in the coming years. The Riksbank's wage forecast also is below the 20 year average, which makes sense. Neither the employers' organizations nor the unions are indicating a return to 4% or higher wage increases", says Nordea Bank. 

Manufacturing is still the wage leading sector in Sweden. Fierce global competition and weak global demand in this sector will keep wage increases on the low side in the wage round that is about to start. Also, the broad wage expectations in society are at the lowest level ever ahead of a wage round.