Swedish inflation rises slightly below expectations in December, energy prices to weigh in on inflation going forward
Swedish headline consumer price inflation accelerated slightly on a sequential basis in December. The CPI index rose to 0.39 percent from November’s 0.1 percent, as compared with consensus expectations of 0.4 percent. On a year-on-year basis, the consumer price inflation remained unchanged at 1.8 percent.
CPIF inflation remained unchanged at 1.7 percent year-on-year in the month, coming in line with consensus expectations as well as Riksbank’s forecast. Excluding energy, CPIF came in at 1.7 percent year-on-year, 0.1 percent below Riksbank’s forecast.
Looking at the details, foreign travel mainly drove the upside in inflation, contributing 0.43 percentage points to the CPIF on a sequential basis. One of the few details that stood out was prices for home electronics, subtracting 0.04 percentage point.
Overall, December CPIF inflation was slightly below expectations, Inflationary pressures are modest and inflation is expected to ease in 2020, noted Nordea Bank in a research report. Electricity prices have dropped in recent weeks, and if they continue to be at today’s level, which is quite likely, they will subtract around 0.2 percentage points from the CPIF in January. Energy prices are expected to be a drag on inflation going forward.
“Much suggests that the Riksbank will stay on hold during 2020, but low inflation and inflation expectations underline that risks are tilted towards easing measures”, added Nordea Bank.