Swedish CPIF inflation accelerates in May, likely to rise further in June

Swedish CPIF inflation accelerated in the month of May, coming above the Riksbank’s view. The headline CPIF inflation rose to 2.1 percent from April’s 1.9 percent and 0.1 percentage point above the central bank’s forecast. The CPIF-inflation excluding energy came in at 1.5 percent and was 0.1 percentage point below the central bank’s view.

Delving into details, food prices came in higher than projection while prices for domestic services came out lower. The volatile prices for domestic travel dropped and should rebound in the month of June, but the outcome was however slightly dovish as domestic inflation declined. The closely watched services inflation dropped.

The dental reform with increased subsidies did not impact the CPIF while it was expected to reduce inflation, stated Nordea Bank in a research report. Electricity prices have increased markedly in recent weeks. As a consequence, CPIF inflation is expected to rise further in June to 2.3 percent to 2.4 percent year-on-year, but might fall and hover around 2 percent in the second half of 2018, said Nordea Bank. Furthermore, CPIF excluding energy is likely to rise later this year due to the weak SEK.

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