Sweden’s producer prices rise in June; imported inflation likely to remain low in future

Sweden’s producer prices, on a sequential basis rose 1.5 percent in June. The gains in producer prices were driven by a weaker SEK and increased energy prices. Moreover, prices rose 2.2 percent on the export marked and 1.7 percent on the import market in the same period. Prices were up 0.9 percent on the domestic market prices. Highest contribution to the growth on the domestic market included higher electricity prices, according to Statistics Sweden.

Many groups, including equipment and machinery, contributed to the upturn on the export and import markets. Prices for domestic supply, domestic and import markets together, rose 1.3 percent on a month-on-month basis in June, where it dropped 2.8 percent year-on-year.

Producer prices in Sweden, on a year-on-year basis, dropped 1.9 percent in June, as compared with the drop of 4.5 percent in May. Prices on the export market fell 3.4 percent year-on-year and 0.3 percent on the domestic market in June. Prices on the import market dropped 5.3 percent in the same period.

The year-on-year number for prices on imported consumption goods rebounded in June to -0.1 percent from -2.6 percent in May. The increase is expected to be welcomed by the Swedish central bank, Riksbank. However, imported inflation would mostly be low in the future and would continue to be a challenge for the central bank, said Nordea Bank in a research note. The SEK has been weaker than anticipated in the summer. However, it will not majorly affect the inflation projection, added Nordea Bank.