Sweden’s CPIF inflation likely accelerated in February

Sweden's CPIF inflation is expected to be in line with the central bank's forecast of 1% y/y in February, whereas CPIF excluding energy is likely to be 0.1% higher at 1.4% y/y. Inflation is still likely to have been impacted by energy prices. On a month-on-month basis, CPI is expected to have increased by 0.2%. Meanwhile, Riksbank is likely to extend the bond purchase programme for H2 2016 to avert SEK appreciation too fast.

Sweden's electricity prices are expected to have declined in February, subtracting nearly 0. 2 percent point of the CPI m/m, while fuel prices are expected to have declined too. Energy prices have risen again in March. If they continue to be at today's level, they will add around 0.2 percentage points. Meanwhile, clothing and footwear prices likely rose, lifting the CPI by nearly 0.2 percentage point, consistent with recent year's seasonal pattern.

Food prices are also expected to have risen, particularly for seasonal reasons.  The volatile prices for foreign travelling likely remained a wild card. Risks are likely balanced. January's inflation reading was relatively high, not least as there were certain signs of a rebound in domestic inflation.