Upward trend in Swedish inflation likely in coming years

The strong growth performance of the Swedish economy will cause in higher inflation in future. The labor market is tightening and trade unions are seemed to be difficult to negotiate.

Moreover, the inflation rate is fueled by krona and import prices. It is assumed that the trade-weighted krona will strengthen in the imminent future. Hence, the prices of goods and services that are highly vulnerable to exchange rate fluctuations will fall back.

However, the rise in wages and domestic prices cannot take the inflation rate to 2%.

"Overall, we stick to our view that CPIF inflation will not reach 2% except perhaps for a few single months next year", says Nordea Bank.