Sweden's core inflation to rise to 1.7%

A simple estimate* of the exchange rate's effect on Sweden's inflation suggests that the earlier weakening of the krona explains a large part of the increase in inflation. The SEK are currently crucial for monetary policy too. 

Prices of clothing and footwear, which represents 5% of the CPI, is an upside risk in the forecast for September. Import prices for these commodities have risen sharply, which is why it is anticipated that prices will also rise at the consumer level. 

However, it is difficult to assess both the timing and magnitude of the upturn, for which upside risks prevail. The upside risk for clothing and footwear is offset by prices of other mainly imported goods and services that may have been lower than forecast.

"Sweden's core inflation measured by CPIF excluding energy will rise to 1.7% y/y in September. If the forecast proves right, core inflation has risen more than 1 percentage point since early 2014 when it was lowest", says Nordea Bank. 

The main drivers for the uptick in the CPI in September are prices on clothing and footwear. This is normal for the season as prices are normally hiked when the summer sales are over and the autumn and winter collections are introduced.