Swedish headline inflation rises below Riksbank’s projections in October

Swedish headline inflation came in below central bank’s projection in October. CPIF inflation came in at 2.4 percent, 0.1 percentage point lower than the Riksbank’s forecast. CPIF inflation excluding energy came in at 1.5 percent year-on-year, 0.15 percentage point below the central bank’s forecast.

Food prices surprisingly dropped in the month, while the expectations were for a small rise. Moreover, prices for imported goods, such as prices for clothing and footwear, came out below projections. The closely monitored services inflation dropped in October as was anticipated, but should rise slowly going forward.

Overall, the imported inflation was the main surprise while domestic inflation came in line with expectations. However, the outcome was bad news for the Riksbank. Moreover, the recent sharp fall in oil prices indicates to downside risks to the central bank’s CPIF forecast and there are question marks about the economic growth.

“We stick to our call of a rate hike in December, but the recent developments underline that it is not a done deal”, added Nordea Bank.