Swedish CPIF inflation came in slightly below Riksbank’s forecast in the month of April. Inflation came in at 2 percent. Excluding energy, CPIF came in at 1.6 percent, consistent with forecasts. Electricity prices were below expectations, explaining why the inflation was below expectations.
Looking at the components, it was a mixed bag. The erratic prices for foreign travel were above expectations, contributing 0.37 percentage points to CPIF sequentially. These prices are quite volatile and might decline again in the months ahead. Prices for telecommunications rose and contributed 0.05 percentage point.
Clothing and footwear prices continued to fall unexpectedly, while prices for other imported goods and services were on the high side. Therefore, imported inflation rose in line with expectations. Meanwhile, services inflation accelerated in April. Prices for foreign travel are included in services.
“All in all, we see no reason to make any major changes to our inflation forecast. High energy prices boost inflation in the near term, but inflation remains a long-term challenge for the Riksbank. A rate hike remains distant”, said Nordea Bank in a research report.
