Sweden headline inflation surpasses expectations in December

Sweden’s consumer price inflation surpassed market expectations in December. The CPI, on a sequential basis, rose 0.5 percent in December from 0 percent in November. Consensus expectation was for a rise of 0.4 percent. On a year-on-year basis, the consumer price inflation rose 1.7 percent, as compared with November’s 1.4 percent and market expectations of a rise of 1.6 percent. Inflation in December also came in above Riksbank’s view.

The higher than projected inflation is welcome news for the Riksbank and underpins the view that the central bank is done easing. But the SEK is a challenge, noted Nordea Bank. Meanwhile, the CPIF gauged inflation rose 1.9 percent, as compared with November’s 1.6 percent and consensus expectation of 1.8 percent. It is exactly 0.1 percent point more than the Riksbank’s forecast and slightly below the target rate of 2 percent.

Energy prices came in higher as compared to a year ago, raising the year-on-year print by 0.6 percentage point. Stripping energy, CPIF inflation came in at 1.3 percent year-on-year, 0.1 percentage point above the central bank’s view.

Prices for domestic travelling contributed 0.11 percentage point to the change in the sequential inflation, whereas foreign travelling came in line with projection. Moreover, prices for cultural and recreational services were up. This signifies that service inflation, which is being closely watched by the central bank, continued to be quite high in December. Moreover, prices for clothing and footwear came slightly higher than projection, stated Nordea Bank.